##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2010

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number
000-25137





Concur Technologies, Inc.

(Exact name of Registrant as specified in its charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Delaware                                                       |  | 91-1608052                       
|(State or other jurisdiction of
incorporation or organization) |  | (IRS Employer
Identification No.)
|                                                               | 
|18400 NE Union Hill Road
Redmond, Washington                   |  | 98052                            
|(Address of principal executive offices)                       |  | (Zip Code)                       

Registrants telephone number, including area code: (425) 702-8808





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    x  Yes     ̈  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).     ̈  Yes     ̈  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  | x                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  [Do not check if a smaller reporting company] |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).     ̈  Yes    x  No

Number of shares of the registrants common stock outstanding as of April 30, 2010: 49,877,171









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##### Table of Contents

CONCUR TECHNOLOGIES, INC.

FORM 10-Q

March 31, 2010

INDEX



|                                                                                              |  |     
|--------------------------------------------------------------------------------------------- |  | ----
|                                                                                              |  | Page
|PART I. FINANCIAL STATEMENTS                                                                  |  |     
|                                                                                              | 
|ITEM 1. FINANCIAL STATEMENTS                                                                  |  |     
|                                                                                              | 
|Income Statements                                                                             |  | 3   
|Balance Sheets                                                                                |  | 4   
|Stockholders Equity Statements                                                               |  | 5   
|Cash Flow Statements                                                                          |  | 6   
|Notes to Financial Statements                                                                 |  | 7   
|                                                                                              | 
|ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 18  
|ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 28  
|ITEM 4. CONTROLS AND PROCEDURES                                                               |  | 28  
|                                                                                              | 
|PART II. OTHER INFORMATION                                                                    |  | 29  
|ITEM 1. LEGAL PROCEEDINGS                                                                     |  | 29  
|ITEM 1A. RISK FACTORS                                                                         |  | 29  
|ITEM 6. EXHIBITS                                                                              |  | 38  
|                                                                                              | 
|SIGNATURE                                                                                     |  | 39  



2



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

Concur Technologies, Inc.

Income Statements

(In thousands, except per share amounts)

(Unaudited)



|                                                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|--------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                |  | Three Months EndedMarch 31, |        |   | Six Months EndedMarch 31, |  
|                                                                |  | 2010                        |        |   | 2009                      |   |        | 2010 |  |   | 2009    |  
|Revenue                                                         |  | $                           | 72,816 |   |                           | $ | 61,991 |      |  | $ | 140,469 |   |  | $ | 120,555 |  
|Expenses:                                                       |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Cost of operations                                              |  |                             | 21,521 |   |                           |   | 18,938 |      |  |   | 41,692  |   |  |   | 36,812  |  
|Sales and marketing                                             |  |                             | 22,712 |   |                           |   | 17,770 |      |  |   | 43,484  |   |  |   | 35,332  |  
|Systems development and programming                             |  |                             | 7,127  |   |                           |   | 6,187  |      |  |   | 14,017  |   |  |   | 12,379  |  
|General and administrative                                      |  |                             | 8,636  |   |                           |   | 6,793  |      |  |   | 16,350  |   |  |   | 13,981  |  
|Amortization of intangible assets                               |  |                             | 1,833  |   |                           |   | 1,541  |      |  |   | 3,688   |   |  |   | 3,082   |  
|                                                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Total expenses                                                  |  |                             | 61,829 |   |                           |   | 51,229 |      |  |   | 119,231 |   |  |   | 101,586 |  
|                                                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Operating income                                                |  |                             | 10,987 |   |                           |   | 10,762 |      |  |   | 21,238  |   |  |   | 18,969  |  
|Other income (expense):                                         |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Interest income                                                 |  |                             | 294    |   |                           |   | 322    |      |  |   | 605     |   |  |   | 1,468   |  
|Interest expense                                                |  |                             | (440   | ) |                           |   | (117   | )    |  |   | (543    | ) |  |   | (250    | )
|Other, net                                                      |  |                             | (332   | ) |                           |   | (422   | )    |  |   | (492    | ) |  |   | (567    | )
|                                                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Total other income (expense), net                               |  |                             | (478   | ) |                           |   | (217   | )    |  |   | (430    | ) |  |   | 651     |  
|                                                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Income before income tax                                        |  |                             | 10,509 |   |                           |   | 10,545 |      |  |   | 20,808  |   |  |   | 19,620  |  
|Income tax expense                                              |  |                             | 3,682  |   |                           |   | 3,796  |      |  |   | 7,439   |   |  |   | 7,062   |  
|                                                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income                                                      |  | $                           | 6,827  |   |                           | $ | 6,749  |      |  | $ | 13,369  |   |  | $ | 12,558  |  
|                                                                |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Net income per share:                                           |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Basic                                                           |  | $                           | 0.14   |   |                           | $ | 0.14   |      |  | $ | 0.27    |   |  | $ | 0.26    |  
|Diluted                                                         |  |                             | 0.13   |   |                           |   | 0.13   |      |  |   | 0.25    |   |  |   | 0.24    |  
|Weighted average shares used in computing net income per share: |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Basic                                                           |  |                             | 49,454 |   |                           |   | 48,430 |      |  |   | 49,248  |   |  |   | 48,624  |  
|Diluted                                                         |  |                             | 52,738 |   |                           |   | 51,174 |      |  |   | 52,619  |   |  |   | 51,473  |  

See notes to financial
statements.



3



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Concur Technologies, Inc.

Balance Sheets

(In thousands, except per share amounts)

(Unaudited)



|                                                               |  |               |          |   |                   |   |          |  
|-------------------------------------------------------------- |  | ------------- | -------- | - | ----------------- | - | -------- | -
|                                                               |  | March 31,2010 |          |   | September 30,2009 |  
|Assets                                                         |  |               |          |   |                   |   |          |  
|Current assets:                                                |  |               |          |   |                   |   |          |  
|Cash and cash equivalents                                      |  | $             | 162,997  |   |                   | $ | 119,185  |  
|Short-term investments                                         |  |               | 124,045  |   |                   |   | 143,549  |  
|Restricted cash                                                |  |               | 3,142    |   |                   |   | 3,599    |  
|Receivable from senior convertible notes offering and warrants |  |               | 265,200  |   |                   |   |         |  
|Accounts receivable, net of allowance of $2,867 and $3,680     |  |               | 48,480   |   |                   |   | 45,801   |  
|Deferred tax assets                                            |  |               | 24,063   |   |                   |   | 24,570   |  
|Deferred costs and other assets                                |  |               | 20,963   |   |                   |   | 18,979   |  
|                                                               |  |               |          |   |                   |   |          |  
|Total current assets                                           |  |               | 648,890  |   |                   |   | 355,683  |  
|Non-current assets:                                            |  |               |          |   |                   |   |          |  
|Property and equipment, net                                    |  |               | 33,489   |   |                   |   | 33,999   |  
|Investments                                                    |  |               | 6,045    |   |                   |   | 4,045    |  
|Deferred costs and other assets                                |  |               | 20,407   |   |                   |   | 19,964   |  
|Intangible assets, net                                         |  |               | 39,831   |   |                   |   | 44,383   |  
|Deferred tax assets                                            |  |               | 17,397   |   |                   |   | 23,904   |  
|Goodwill                                                       |  |               | 190,077  |   |                   |   | 188,907  |  
|                                                               |  |               |          |   |                   |   |          |  
|Total assets                                                   |  | $             | 956,136  |   |                   | $ | 670,885  |  
|                                                               |  |               |          |   |                   |   |          |  
|                                                               |  |              
|Liabilities and stockholders equity                           |  |               |          |   |                   |   |          |  
|Current liabilities:                                           |  |               |          |   |                   |   |          |  
|Accounts payable                                               |  | $             | 3,501    |   |                   | $ | 3,638    |  
|Customer funding liabilities                                   |  |               | 62,391   |   |                   |   | 56,424   |  
|Note hedges payable                                            |  |               | 52,300   |   |                   |   |         |  
|Accrued compensation                                           |  |               | 12,002   |   |                   |   | 17,508   |  
|Acquisition-related liabilities                                |  |               |         |   |                   |   | 902      |  
|Other accrued expenses and liabilities                         |  |               | 7,728    |   |                   |   | 10,539   |  
|Short-term lease liabilities and other                         |  |               | 777      |   |                   |   | 1,129    |  
|Deferred revenues                                              |  |               | 41,536   |   |                   |   | 34,955   |  
|                                                               |  |               |          |   |                   |   |          |  
|Total current liabilities                                      |  |               | 180,235  |   |                   |   | 125,095  |  
|Non-current liabilities:                                       |  |               |          |   |                   |   |          |  
|Senior convertible notes, net                                  |  |               | 194,331  |   |                   |   |         |  
|Long-term lease liabilities and other                          |  |               |         |   |                   |   | 199      |  
|Deferred rent                                                  |  |               | 1,468    |   |                   |   | 1,601    |  
|Deferred revenues                                              |  |               | 13,423   |   |                   |   | 14,083   |  
|Tax liabilities                                                |  |               | 8,185    |   |                   |   | 8,577    |  
|                                                               |  |               |          |   |                   |   |          |  
|Total liabilities                                              |  |               | 397,642  |   |                   |   | 149,555  |  
|                                                               |  |               |          |   |                   |   |          |  
|Stockholders equity:                                          |  |               |          |   |                   |   |          |  
|Convertible preferred stock, par value $0.001 per share        |  |               |         |   |                   |   |         |  
|Authorized shares: 5,000; No shares issued or outstanding      |  |               |          |   |                   |   |          |  
|Common stock, $0.001 par value per share                       |  |               | 50       |   |                   |   | 49       |  
|Authorized shares: 195,000                                     |  |               |          |   |                   |   |          |  
|Shares issued and outstanding: 49,707 and 48,988               |  |               |          |   |                   |   |          |  
|Additional paid-in capital                                     |  |               | 667,208  |   |                   |   | 640,911  |  
|Accumulated deficit                                            |  |               | (105,782 | ) |                   |   | (119,151 | )
|Accumulated other comprehensive loss                           |  |               | (2,982   | ) |                   |   | (479     | )
|                                                               |  |               |          |   |                   |   |          |  
|Total stockholders equity                                     |  |               | 558,494  |   |                   |   | 521,330  |  
|                                                               |  |               |          |   |                   |   |          |  
|Total liabilities and stockholders equity                     |  | $             | 956,136  |   |                   | $ | 670,885  |  
|                                                               |  |               |          |   |                   |   |          |  

See notes to financial statements.



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Concur Technologies, Inc.

Stockholders Equity Statements

(In thousands)



|                                                               |  |              |   |  |                   |    |   |             |   |         |                               |  |   |                    |   |  |        |        |   |  |   |         |  
|-------------------------------------------------------------- |  | ------------ | - |  | ----------------- | -- | - | ----------- | - | ------- | ----------------------------- |  | - | ------------------ | - |  | ------ | ------ | - |  | - | ------- | -
|                                                               |  | Common Stock |   |  | AdditionalPaid-In |    |   | Accumulated |   |         | AccumulatedOtherComprehensive |  |   | TotalStockholders |  
|                                                               |  | Shares       |   |  | Amount            |    |   | Capital     |   |         | Deficit                       |  |   | Income (Expense)   |   |  | Equity |       
|Balance as of September 30, 2008                               |  | 50,286       |   |  | $                 | 50 |   |             | $ | 679,526 |                               |  |   | (144,828           | ) |  |        | (210   | ) |  |   | 534,538 |  
|Common stock repurchased                                       |  | (2,025       | ) |  |                   | (2 | ) |             |   | (54,771 | )                             |  |   |                   |   |  |        |       |   |  |   | (54,773 | )
|Common stock issued:                                           |  |              |   |  |                   |    |   |             |   |         |                               |  |   |                    |   |  |        |        |   |  |   |         |  
|Employee Stock Purchase Plan                                   |  | 44           |   |  |                   |   |   |             |   | 1,176   |                               |  |   |                   |   |  |        |       |   |  |   | 1,176   |  
|Stock option exercises and vesting of restricted stock units   |  | 559          |   |  |                   | 1  |   |             |   | 1,068   |                               |  |   |                   |   |  |        |       |   |  |   | 1,069   |  
|Acquisition of Etap-On-Line                                    |  | 124          |   |  |                   |   |   |             |   | 4,318   |                               |  |   |                   |   |  |        |       |   |  |   | 4,318   |  
|Equity Issuance costs                                          |  |             |   |  |                   |   |   |             |   | (2,842  | )                             |  |   |                   |   |  |        |       |   |  |   | (2,842  | )
|Share-based compensation expense                               |  |             |   |  |                   |   |   |             |   | 12,436  |                               |  |   |                   |   |  |        |       |   |  |   | 12,436  |  
|Foreign currency translation adjustment loss                   |  |             |   |  |                   |   |   |             |   |        |                               |  |   |                   |   |  |        | (278   | ) |  |   | (278    | )
|Unrealized gain on investments                                 |  |             |   |  |                   |   |   |             |   |        |                               |  |   |                   |   |  |        | 9      |   |  |   | 9       |  
|Net Income                                                     |  |             |   |  |                   |   |   |             |   |        |                               |  |   | 25,677             |   |  |        |       |   |  |   | 25,677  |  
|                                                               |  |              |   |  |                   |    |   |             |   |         |                               |  |   |                    |   |  |        |        |   |  |   |         |  
|Balance as of September 30, 2009                               |  | 48,988       |   |  |                   | 49 |   |             |   | 640,911 |                               |  | $ | (119,151           | ) |  | $      | (479   | ) |  | $ | 521,330 |  
|                                                               |  |              |   |  |                   |   
|Common stock issued:                                           |  |              |   |  |                   |    |   |             |   |         |                               |  |   |                    |   |  |        |        |   |  |   |         |  
|Employee Stock Purchase Plan                                   |  | 20           |   |  |                   |   |   |             |   | 720     |                               |  |   |                   |   |  |        |       |   |  |   | 720     |  
|Stock option exercises and vesting of restricted stock units   |  | 699          |   |  |                   | 1  |   |             |   | (1,489  | )                             |  |   |                   |   |  |        |       |   |  |   | (1,488  | )
|Share-based compensation expense                               |  |             |   |  |                   |   |   |             |   | 7,532   |                               |  |   |                   |   |  |        |       |   |  |   | 7,532   |  
|Equity component of the senior convertible notes issuance, net |  |             |   |  |                   |   |   |             |   | 30,061  |                               |  |   |                   |   |  |        |       |   |  |   | 30,061  |  
|Purchase of note hedges                                        |  |             |   |  |                   |   |   |             |   | (33,202 | )                             |  |   |                   |   |  |        |       |   |  |   | (33,202 | )
|Sale of warrants                                               |  |             |   |  |                   |   |   |             |   | 22,675  |                               |  |   |                   |   |  |        |       |   |  |   | 22,675  |  
|Foreign currency translation adjustment loss                   |  |             |   |  |                   |   |   |             |   |        |                               |  |   |                   |   |  |        | (2,505 | ) |  |   | (2,505  | )
|Unrealized gain on investments                                 |  |             |   |  |                   |   |   |             |   |        |                               |  |   |                   |   |  |        | 2      |   |  |   | 2       |  
|Net Income                                                     |  |             |   |  |                   |   |   |             |   |        |                               |  |   | 13,369             |   |  |        |       |   |  |   | 13,369  |  
|                                                               |  |              |   |  |                   |    |   |             |   |         |                               |  |   |                    |   |  |        |        |   |  |   |         |  
|Balance as of March 31, 2010                                   |  | 49,707       |   |  | $                 | 50 |   |             | $ | 667,208 |                               |  | $ | (105,782           | ) |  | $      | (2,982 | ) |  | $ | 558,494 |  
|                                                               |  |              |   |  |                   |    |   |             |   |         |                               |  |   |                    |   |  |        |        |   |  |   |         |  

See notes to financial statements.



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Concur Technologies, Inc.

Cash Flow Statements

(In thousands)

(Unaudited)



|                                                                                  |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------- |  | --------------------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                  |  | Three Months EndedMarch 31, |         |   | Six Months EndedMarch 31, |  
|                                                                                  |  | 2010                        |         |   | 2009                      |   |         | 2010 |  |   | 2009    |  
|Operating activities:                                                             |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Net income                                                                        |  | $                           | 6,827   |   |                           | $ | 6,749   |      |  | $ | 13,369  |   |  | $ | 12,558  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Amortization of intangible assets                                                 |  |                             | 1,833   |   |                           |   | 1,541   |      |  |   | 3,688   |   |  |   | 3,082   |  
|Depreciation                                                                      |  |                             | 4,164   |   |                           |   | 4,104   |      |  |   | 8,296   |   |  |   | 8,140   |  
|Net recovery of sales allowances                                                  |  |                             | (485    | ) |                           |   | (383    | )    |  |   | (814    | ) |  |   | (863    | )
|Share-based compensation expense                                                  |  |                             | 3,866   |   |                           |   | 2,141   |      |  |   | 7,365   |   |  |   | 4,644   |  
|Deferred income taxes                                                             |  |                             | 3,659   |   |                           |   | 3,360   |      |  |   | 7,043   |   |  |   | 6,029   |  
|Changes in operating assets and liabilities:                                      |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Accounts receivable                                                               |  |                             | (4,451  | ) |                           |   | 3,236   |      |  |   | (2,140  | ) |  |   | 2,371   |  
|Deferred costs and other assets                                                   |  |                             | (1,822  | ) |                           |   | (1,820  | )    |  |   | (2,529  | ) |  |   | (3,026  | )
|Accounts payable                                                                  |  |                             | (534    | ) |                           |   | 1,977   |      |  |   | (19     | ) |  |   | 2,670   |  
|Accrued liabilities                                                               |  |                             | 915     |   |                           |   | 2,488   |      |  |   | (7,996  | ) |  |   | (10,391 | )
|Deferred revenues                                                                 |  |                             | 4,270   |   |                           |   | 353     |      |  |   | 6,128   |   |  |   | 2,300   |  
|                                                                                  |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Net cash provided by operating activities                                         |  |                             | 18,242  |   |                           |   | 23,746  |      |  |   | 32,391  |   |  |   | 27,514  |  
|                                                                                  |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Investing activities:                                                             |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Purchases of investments                                                          |  |                             | (55,942 | ) |                           |   |        |      |  |   | (93,201 | ) |  |   |        |  
|Maturities of investments                                                         |  |                             | 72,098  |   |                           |   |        |      |  |   | 112,737 |   |  |   |        |  
|Increase in customer funding liabilities, net of changes in restricted cash       |  |                             | 20,808  |   |                           |   | 2,306   |      |  |   | 6,389   |   |  |   | 1,199   |  
|Investments in unconsolidated affiliate                                           |  |                             | (2,000  | ) |                           |   | (4,020  | )    |  |   | (2,000  | ) |  |   | (4,020  | )
|Purchases of property and equipment                                               |  |                             | (4,014  | ) |                           |   | (4,943  | )    |  |   | (7,659  | ) |  |   | (10,545 | )
|Payments for acquisitions, net of cash acquired                                   |  |                             | (2,378  | ) |                           |   | (144    | )    |  |   | (3,540  | ) |  |   | (158    | )
|                                                                                  |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Net cash provided by (used in) investing activities                               |  |                             | 28,572  |   |                           |   | (6,801  | )    |  |   | 12,726  |   |  |   | (13,524 | )
|                                                                                  |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Financing activities:                                                             |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Payments for issuance of common stock                                             |  |                             |        |   |                           |   | (2,829  | )    |  |   |        |   |  |   | (2,829  | )
|Net (payments) proceeds from share-based equity award activity                    |  |                             | (2,603  | ) |                           |   | (909    | )    |  |   | (1,489  | ) |  |   | 927     |  
|Proceeds from employee stock purchase plan activity                               |  |                             | 435     |   |                           |   |        |      |  |   | 720     |   |  |   | 350     |  
|Payments on repurchase of common stock                                            |  |                             |        |   |                           |   |        |      |  |   |        |   |  |   | (54,773 | )
|Repayments on borrowings and capital leases                                       |  |                             | (279    | ) |                           |   | (430    | )    |  |   | (551    | ) |  |   | (852    | )
|                                                                                  |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Net cash used in financing activities                                             |  |                             | (2,447  | ) |                           |   | (4,168  | )    |  |   | (1,320  | ) |  |   | (57,177 | )
|                                                                                  |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Effect of foreign currency exchange rate changes on cash and cash equivalents     |  |                             | (91     | ) |                           |   | (280    | )    |  |   | 15      |   |  |   | (2,383  | )
|                                                                                  |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                              |  |                             | 44,276  |   |                           |   | 12,497  |      |  |   | 43,812  |   |  |   | (45,570 | )
|Cash and cash equivalents at beginning of period                                  |  |                             | 118,721 |   |                           |   | 209,658 |      |  |   | 119,185 |   |  |   | 267,725 |  
|                                                                                  |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Cash and cash equivalents at end of period                                        |  | $                           | 162,997 |   |                           | $ | 222,155 |      |  | $ | 162,997 |   |  | $ | 222,155 |  
|                                                                                  |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Supplemental cash flow information:                                               |  |                             |         |   |                           |   |         |      |  |   |         |   |  |   |         |  
|Cash paid for interest                                                            |  | $                           | 70      |   |                           | $ | 68      |      |  | $ | 106     |   |  | $ | 68      |  
|Income tax payments, net                                                          |  |                             | 619     |   |                           |   | 291     |      |  |   | 1,064   |   |  |   | 340     |  

See notes to financial
statements.



6



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS

March 31, 2010

(Unaudited)

Note
1. Description of the Company and Basis of Presentation

Throughout these financial statements Concur Technologies,
Inc. is referred to as Concur, we, us and our. We report our operating results on the basis of a fiscal year that starts October 1 and ends September 30. We refer to our fiscal years ended
September 30, 2009, 2010 and 2011, as 2009, 2010 and 2011. All dollar, option and share amounts are reported in thousands, unless otherwise noted.

Description of the Company

We are a leading global provider of on-demand Employee Spend Management solutions. Our integrated travel and expense software solutions
enable organizations to control costs by automating the processes used to manage employee spending. Our solutions unite online travel procurement with automated expense reporting, streamline corporate event management, and optimize the process of
managing vendor payments, employee check requests and direct reimbursements. Our unified approach to managing these processes provides our customers with visibility into their employee spending, which helps them analyze trends, influence budget
decisions, improve forecasting, and monitor and enforce compliance with their corporate policies and external regulations, such as the Sarbanes-Oxley Act of 2002.

Our core mission is to continuously innovate to reduce the costs of employee spend management for our customers. We work closely with our
customers to identify opportunities to increase the value of our solutions by streamlining the travel procurement, expense reporting and vendor payment processes, reducing operating costs, improving internal controls, enhancing the overall user
experience and user adoption rates, and enabling customers to gain greater insight into their spending patterns through comprehensive analytics.

We sell our solutions primarily as subscription services. We market and sell our solutions worldwide through our direct sales
organization and through indirect distribution channels such as strategic resellers.

Concur®,
Concur®Expense,
Concur®Travel & Expense,
Concur®Cliqbook Travel,
Concur®Invoice,
Concur®Connect,
Concur®ExpenseLink, and
Concur®Advantage are among the registered trademarks
and registered service marks of Concur or our subsidiaries, in the United States and other countries. Other parties marks are the property of their respective owners and should be treated as such.

Basis of Presentation

The accompanying financial statements present our results of operations, financial position and cash flows on a consolidated basis. These
unaudited financial statements include the accounts of Concur and our subsidiaries. We have eliminated all intercompany accounts and transactions in these financial statements.

We have prepared the accompanying unaudited financial statements in accordance with accounting principles generally accepted in the
United States (GAAP) for interim financial reporting. In our opinion, we have included all adjustments necessary for a fair presentation. These adjustments consist of normal recurring items. Our unaudited financial statements are not
necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited financial statements should be read in conjunction with the financial statements and related notes included in our Annual
Report on Form 10-K for the fiscal year ended September 30, 2009, filed with the Securities and Exchange Commission (SEC) on November 18, 2009.



7



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS(Continued)

March 31, 2010

(Unaudited)



Reclassifications

Certain amounts previously presented for prior periods have been reclassified to conform to current presentation. The reclassifications
had no effect on net income or total stockholders equity.

Note 2. Accounting Estimates, Summary of Significant Accounting
Policies and Recent Accounting Pronouncements

Use of Estimates

We prepared our financial statements in conformity with GAAP, which requires us to make estimates and assumptions affecting the amounts
reported in the financial statements and accompanying notes. Changes in these estimates and assumptions may have a material impact on our financial statements and accompanying notes. Examples of estimates and assumptions include the determination of
certain provisions, including allowances for accounts receivable, valuing assets and liabilities acquired through business combinations, valuing and estimating useful lives of intangible assets, deferring certain revenues and costs, estimating
expected lives of customer relationships, product warranties, estimating useful lives of property and equipment, and estimating tax valuation allowances.

Recently Adopted Accounting Pronouncements

The Financial Accounting Standards Boards (FASB) Accounting Standards Codification (ASC) became effective
for us during the fourth quarter of 2009. This codification brings all authoritative GAAP that has been issued by a standard setter into one place. The codification retains existing GAAP without changing it.

On October 1, 2009, we adopted authoritative FASB guidance on business combinations. The guidance retains the fundamental
requirements that the acquisition method of accounting (previously referred to as the purchase method of accounting) be used for all business combinations, but requires a number of changes, including changes in the way assets and liabilities are
recognized and measured as a result of business combinations. It also requires the capitalization of in-process research and development at fair value and requires the expensing of acquisition-related costs as incurred. Adoption of the new guidance
did not have a material impact on our financial statements.

On October 1, 2009, we adopted authoritative FASB guidance
that changes the accounting and reporting for non-controlling interests. Non-controlling interests are to be reported as a component of equity separate from the parents equity, and purchases or sales of equity interests that do not result in a
change in control are to be accounted for as equity transactions. In addition, net income attributable to a non-controlling interest is to be included in net income and, upon a loss of control, the interest sold, as well as any interest retained, is
to be recorded at fair value with any gain or loss recognized in net income. Adoption of the new guidance did not have a material impact on our financial statements.

On October 1, 2009, we adopted authoritative FASB guidance on fair value measurement for nonfinancial assets and liabilities, except
for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Adoption of the new guidance did not have a material impact on our financial statements.

Recently Issued Accounting Pronouncements

In October 2009, the FASB issued authoritative guidance on revenue arrangements with multiple deliverables that are outside the scope of
the software revenue recognition guidance. Under the new guidance, when vendor specific objective evidence or third party evidence for deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate
deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue
recognition. The new guidance also eliminates the use of the residual method of allocation and instead requires that arrangement consideration be allocated at the inception of the arrangement, to all deliverables based on their relative selling
price. We are required to adopt these changes to revenue recognition in the first quarter of 2011. We believe adoption of this new guidance will not have a material impact on our financial statements



8



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS(Continued)

March 31, 2010

(Unaudited)



Note 3. Net Income Per Share

We calculate basic net income per share by dividing net income for the period by the weighted-average number of shares of common stock
outstanding during the period. We calculate diluted net income per share by dividing net income for the period by the weighted-average number of shares of common stock outstanding during the period, plus any dilutive effect from share-based equity
awards and warrants during the period, under the treasury stock method. Dilutive shares outstanding do not include any effect from the conversion of our senior convertible notes issued in March 2010, or exercise of related warrants, as their impact
would be anti-dilutive for the three and six months ended March 31, 2010. The computation of basic and diluted net income per share is as follows:



|                                                       |  |                             |        |                           |   |        |  |      |        |  |   |       
|------------------------------------------------------ |  | --------------------------- | ------ | ------------------------- | - | ------ |  | ---- | ------ |  | - | ------
|                                                       |  | Three Months EndedMarch 31, |        | Six Months EndedMarch 31,
|                                                       |  | 2010                        |        | 2009                      |   | 2010   |  | 2009
|Net income                                             |  | $                           | 6,827  |                           | $ | 6,749  |  | $    | 13,369 |  | $ | 12,558
|Weighted average number of shares outstanding:         |  |                             |        |                           |   |        |  |      |        |  |   |       
|Basic                                                  |  |                             | 49,454 |                           |   | 48,430 |  |      | 49,248 |  |   | 48,624
|Dilutive effect of share-based equity award plans (1)  |  |                             | 3,222  |                           |   | 2,744  |  |      | 3,344  |  |   | 2,849 
|Dillutive effect of warrants (2)                       |  |                             | 62     |                           |   |       |  |      | 27     |  |   |      
|                                                       |  |                             |        |                           |   |        |  |      |        |  |   |       
|Diluted                                                |  |                             | 52,738 |                           |   | 51,174 |  |      | 52,619 |  |   | 51,473
|                                                       |  |                             |        |                           |   |        |  |      |        |  |   |       
|Net income per share available to common stockholders: |  |                             |        |                           |   |        |  |      |        |  |   |       
|Basic                                                  |  | $                           | 0.14   |                           | $ | 0.14   |  | $    | 0.27   |  | $ | 0.26  
|Diluted                                                |  |                             | 0.13   |                           |   | 0.13   |  |      | 0.25   |  |   | 0.24  



|(1) | For the three and six months ended March 31, 2010 and 2009, we did not exclude any options to purchase Concur common stock from the calculations of diluted net
income per share.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | For the three and six months ended March 31, 2009, we excluded warrants to purchase 1,280 shares of Concur common stock from the calculations of diluted net income
per share.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 4. Property and Equipment

Our property and equipment consisted of the following:



|                               |  |               |         |   |                   |   |         |  
|------------------------------ |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                               |  | March 31,2010 |         |   | September 30,2009 |  
|Land and building              |  | $             | 5,601   |   |                   | $ | 5,596   |  
|Leasehold improvements         |  |               | 5,108   |   |                   |   | 5,111   |  
|Computer hardware              |  |               | 19,311  |   |                   |   | 17,590  |  
|Computer software              |  |               | 45,731  |   |                   |   | 43,577  |  
|Furniture and equipment        |  |               | 1,108   |   |                   |   | 1,395   |  
|                               |  |               |         |   |                   |   |         |  
|Property and equipment, gross  |  |               | 76,859  |   |                   |   | 73,269  |  
|Less: accumulated depreciation |  |               | (43,370 | ) |                   |   | (39,270 | )
|                               |  |               |         |   |                   |   |         |  
|Property and equipment, net    |  | $             | 33,489  |   |                   | $ | 33,999  |  
|                               |  |               |         |   |                   |   |         |  



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS(Continued)

March 31, 2010

(Unaudited)



Note 5. Investments

Equity Investment in Private Company

In January 2009, we made an investment of $4.0 million, including transaction costs, in RideCharge, Inc. (RideCharge), a
leading provider of ground travel booking that allows business travelers to book, pay and get reimbursed for ground transportation. We initially acquired 3.2 million shares of RideCharge preferred stock, and warrants to purchase an additional
1.6 million shares of RideCharge preferred stock at $1.25 per share. In February 2010, we exercised the warrants to purchase an additional 1.6 million shares of RideCharge preferred stock, increasing our investment to $6.0 million.

Because our preferred stock in RideCharge does not meet all the characteristics of in-substance common stock, we have
accounted for our investment under the cost method with net accumulated earnings recorded only to the extent of distributed dividends. We have reported our investment in RideCharge in Investments on our balance sheet.

All Other Investments

We generally invest our excess cash in investment grade short- to intermediate-term fixed income securities and money market funds. The
portion in cash and cash equivalents represents highly liquid instruments with insignificant interest rate risk and original maturities of three months or less. Unrealized gains and losses related to available for sale securities are reported in
Other comprehensive gain (loss), as disclosed in Note 12.

Note 6. Intangible Assets

Our intangible assets arise from our business acquisitions. The following table presents our intangible assets as of March 31, 2010,
and September 30, 2009:



|                          |  |                     |        |                         |   |                                         |  |                     |        |                         |   |                                            |  |   |        |  |   |       
|------------------------- |  | ------------------- | ------ | ----------------------- | - | --------------------------------------- |  | ------------------- | ------ | ----------------------- | - | ------------------------------------------ |  | - | ------ |  | - | ------
|Description               |  | GrossCarryingAmount |        | AccumulatedAmortization |   | Net CarryingAmount as of March 31, 2010 |  | GrossCarryingAmount |        | AccumulatedAmortization |   | Net CarryingAmount as of September 30,2009
|Trade name and trademarks |  | $                   | 672    |                         | $ | 90                                      |  | $                   | 582    |                         | $ | 1,029                                      |  | $ | 324    |  | $ | 705   
|Technology                |  |                     | 13,640 |                         |   | 8,985                                   |  |                     | 4,655  |                         |   | 13,721                                     |  |   | 7,432  |  |   | 6,289 
|Customer relationships    |  |                     | 44,335 |                         |   | 9,741                                   |  |                     | 34,594 |                         |   | 45,120                                     |  |   | 7,731  |  |   | 37,389
|                          |  |                     |        |                         |   |                                         |  |                     |        |                         |   |                                            |  |   |        |  |   |       
|Total                     |  | $                   | 58,647 |                         | $ | 18,816                                  |  | $                   | 39,831 |                         | $ | 59,870                                     |  | $ | 15,487 |  | $ | 44,383
|                          |  |                     |        |                         |   |                                         |  |                     |        |                         |   |                                            |  |   |        |  |   |       

For the three and six months ended March 31,
2010, we recorded amortization expense of $1.8 million and $3.7 million in our income statements, and we recorded $1.5 million and $3.1 million for the same periods in 2009.



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS(Continued)

March 31, 2010

(Unaudited)



Estimated amortization expense for the remaining estimated useful life of the intangible
assets is as follows as of March 31, 2010:



|                                                 |  |                                 |       
|------------------------------------------------ |  | ------------------------------- | ------
|Years Ending September 30,                       |  | Amortizationof IntangibleAssets
|2010 (April 1, 2010, through September 30, 2010) |  | $                               | 3,565 
|2011                                             |  |                                 | 6,866 
|2012                                             |  |                                 | 4,671 
|2013                                             |  |                                 | 4,178 
|2014                                             |  |                                 | 4,156 
|Thereafter                                       |  |                                 | 16,395
|                                                 |  |                                 |       
|Total                                            |  | $                               | 39,831
|                                                 |  |                                 |       

Note 7. Customer Funding Liabilities

We draw funds from and make payments on behalf of our customers for employee expense reimbursements and related corporate credit card
payments. We hold these funds in cash and record our obligation to make these expense reimbursements and payments on behalf of our customers as Customer Funding Liabilities. Some of our customers require that we maintain restricted bank accounts to
hold these funds. Amounts held in these accounts are recorded as restricted cash.

Note 8. Debt

Senior Convertible Notes

In March 2010, we issued at par value $250.0 million principal amount of our 2.50% senior convertible notes due in 2015 (the Initial
Notes). As of March 31, 2010 we recorded a receivable of $265.2 million from the Initial Notes and the Warrants described below on our balance sheet. In addition, the underwriters were granted an over-allotment option to purchase an
additional $37.5 million principal amount of 2.50% senior convertible notes due in 2015, which brings the total amount issued under such notes and the Initial Notes to $287.5 million (collectively, the Notes). The overallotment option
was exercised in full on April 1, 2010 and therefore is not reflected in our March 31, 2010 financial statements. All amounts from the issuance of the Notes settled in April 2010.

The Notes are governed by an Indenture, dated as of April 6, 2010 (Indenture), between the Company and Wells Fargo Bank,
National Association, as trustee. The Notes will mature on April 15, 2015, unless earlier repurchased or converted, and bear interest at a rate of 2.50% per year payable semi-annually in arrears on April 15 and October 15 of each
year, commencing October 15, 2010.

The Notes are convertible into cash and shares of our common stock, if any, at an
initial conversion rate of 19.10 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $52.35 per share, subject to adjustment. Prior to January 15, 2015, conversion is
subject to the satisfaction of certain conditions set forth below. Holders of the Notes who convert their Notes in connection with a fundamental change (as defined in the Indenture) will, under certain circumstances, be entitled to a make-whole
premium in the form of an increase in the conversion rate. Additionally, in the event of a fundamental change, holders of the Notes may require the Company to repurchase all or a portion of their Notes at a repurchase price equal to 100% of the
principal amount of Notes, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date (as defined in the Indenture).



11



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS(Continued)

March 31, 2010

(Unaudited)



Holders of the Notes may convert their Notes on or after January 15, 2015, until
the close of business on the second scheduled trading day immediately preceding the maturity date. The conversion rate will be subject to adjustment in some events but will not be adjusted for accrued interest. Upon conversion, we will satisfy our
conversion obligation by delivering cash and shares of common stock, if any, based on a daily settlement amount (as defined in the Indenture). Prior to January 15, 2015, holders of the Notes may convert their Notes under any of the following
conditions:



| |  |  | during any calendar quarter commencing after June 30, 2010, (and only during such calendar quarter), if the last reported sale price of common
stock for 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to 130% of the applicable conversion price on each
applicable trading day;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Notes
for each day of that five consecutive trading day period was less than 98% of the product of the last reported sale price of common stock and the applicable conversion rate on such day; or
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | upon the occurrence of specified corporate events.
| | - |  | --------------------------------------------------

In accounting for the issuance of the Notes, we separated the Notes into liability and equity components. The carrying amount of the
liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting
the fair value of the liability component from the par value of the Notes as a whole. The excess of the principal amount of the liability component over its carrying amount (debt discount) is amortized to interest expense over the term
of the Note. The equity component will not be remeasured as long as it continues to meet the conditions for equity classification.

In accounting for the transaction costs related to the issuance of the Notes, we allocated the total amount incurred to the liability and
equity components. Transaction costs attributable to the liability component are being amortized to expense over the term of the Notes, and transaction costs attributable to the equity component were netted with the equity component in additional
paid-in capital. Debt issuance costs were $6.0 million as of March 31, 2010, and equity issuance costs were $1.5 million. Additionally, we recorded a deferred tax asset of $1.0 million in connection with the Initial Notes.



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS(Continued)

March 31, 2010

(Unaudited)



The following table shows the amounts recorded within our financials as of
March 31, 2010, and the additional amounts recognized in April 2010, from the exercise of the over allotment of $37.5 million:



|                              |  |                    |         |   |                               |   |        |       |  |   |         |  
|----------------------------- |  | ------------------ | ------- | - | ----------------------------- | - | ------ | ----- |  | - | ------- | -
|                              |  | Transaction traded |         |   |                               |  
|                              |  | March 2010         |         |   | April 2010                    |   |        |       | 
|                              |  | $250.0 Million     |         |   | Over-Allotment($37.5 million) |   |        | Total | 
|Liability components:         |  |                    |         |   |                               |   |        |       |  |   |         |  
|Principal amount              |  | $                  | 250,000 |   |                               | $ | 37,500 |       |  | $ | 287,500 |  
|Less: note discount           |  |                    | (49,679 | ) |                               |   | (7,452 | )     |  |   | (57,131 | )
|Less: note issuance costs     |  |                    | (5,990  | ) |                               |   | (826   | )     |  |   | (6,816  | )
|                              |  |                    |         |   |                               |   |        |       |  |   |         |  
|Convertible senior notes, net |  | $                  | 194,331 |   |                               | $ | 29,222 |       |  | $ | 223,553 |  
|                              |  |                    |         |   |                               |   |        |       |  |   |         |  
|Equity components             |  | $                  | 49,679  |   |                               | $ | 7,452  |       |  | $ | 57,131  |  
|Less: issuance costs          |  |                    | (1,485  | ) |                               |   | (205   | )     |  |   | (1,690  | )
|                              |  |                    |         |   |                               |   |        |       |  |   |         |  
|Additional paid-in capital    |  | $                  | 48,194  |   |                               | $ | 7,247  |       |  | $ | 55,441  |  
|                              |  |                    |         |   |                               |   |        |       |  |   |         |  
|Note hedge costs              |  | $                  | 52,300  |   |                               | $ | 7,845  |       |  | $ | 60,145  |  
|Warrants proceeds             |  |                    | 22,675  |   |                               |   | 3,401  |       |  |   | 26,076  |  
|                              |  |                    |         |   |                               |   |        |       |  |   |         |  
|Net cost                      |  | $                  | 29,625  |   |                               | $ | 4,444  |       |  | $ | 34,069  |  
|                              |  |                    |         |   |                               |   |        |       |  |   |         |  

We did not record any interest expense related to the Notes in the financial statements for the period
ending March 31, 2010.

The net proceeds from the Notes was approximately $279.0 million after payment of the initial
purchasers discounts and offering expenses. We used approximately $34.1 million of the net proceeds of the Notes offering to pay the cost of the Note Hedges described below, which was partially offset by the proceeds from our sale of the
Warrants described below. We expect to use the net proceeds of the Notes for general corporate purposes, including potential acquisitions and strategic transactions.

Note Hedges

To minimize the impact of potential economic dilution upon conversion of the Notes, we entered into note hedge transactions (Note
Hedges) with respect to our common stock. We paid $52.3 million for the note hedges, which is shown in note hedges Payable on our March 31, 2010, balance sheet. The Note Hedges cover approximately 5.0 million shares of
our common stock at a strike price of $52.35, subject to anti-dilution adjustments, and are exercisable upon conversion of the Notes. The Note Hedges will expire upon the maturity of the Notes. The Note Hedges are intended to reduce the potential
economic dilution upon conversion of the Notes in the event that the market value per share of our common stock, as measured under the Notes, at the time of exercise is greater than the conversion price of the Notes.

Warrants

Separately, we entered into warrant transactions (Warrants), whereby we sold warrants to acquire shares of our common stock at
a strike price of $73.29 per share, subject to anti-dilution adjustments. The Warrants will expire upon the maturity of the Notes. We received proceeds of $22.7 million from the sale of the Warrants, which is shown as part of the $265.2 million from
the Initial Notes and Warrants on our March 31, 2010, balance sheet. If the market value per share of our common stock, as measured under the Warrants, exceeds the strike price of the Warrants, the Warrants will have a dilutive effect on our
net income per share.



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS(Continued)

March 31, 2010

(Unaudited)



Revolving Credit Facility

On March 29, 2010, we terminated a credit agreement with a financial institution that provided for a revolving credit facility for up
to $70 million that was set to expire in September 2012, or earlier as provided in the credit agreement. As of March 29, 2010, we were in compliance with all loan covenants under the terms of the credit agreement, and had no outstanding
borrowings under the agreement.

Note 9. Income Taxes

We make estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in
the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

We measure and recognize uncertain tax positions. To recognize such positions we must first determine if it is more likely than not that
the position will be sustained on audit. We then must measure the benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Since we are in a net operating loss position for those positions that require a
reserve we do not include interest and penalties related to our contingencies in our income tax expense.

Our tax provision
for interim periods is derived using an estimate of our annual effective rate, adjusted for any material items. Our effective tax rate of 35.75% varies from the statutory 35% rate due to a reserve for uncertain tax positions and state income taxes
moderated by research and development tax credits and lower foreign income tax rates.

Note 10. Share-based Compensation

Our 2007 Equity Incentive Plan (Equity Plan) provides for grants of stock options, restricted stock, stock
bonuses, stock appreciation rights (SARs) and restricted stock units (RSUs). As of March 31, 2010, we had 1.2 million shares of common stock reserved for future grants under our Equity Plan, excluding shares of
common stock reserved for future issue under our ESPP. We recognize compensation expense for equity awards on a straight line basis over the requisite service period of the award.

We have calculated an additional paid in capital (APIC) pool that represents the excess tax benefits related to share-based
compensation that are available to absorb future tax deficiencies. We include those excess tax benefits in APIC only when they have been realized. If the amount of future tax deficiencies is greater than the available APIC pool, we will record the
excess as income tax expense in our income statements. For the three and six months ended March 31, 2010 and 2009, we did not record any tax deficiencies against the APIC pool. Excess tax benefits or tax deficiencies, to the extent realized,
are a factor in the calculation of diluted shares used in computing dilutive income per share.



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS(Continued)

March 31, 2010

(Unaudited)



The following table presents our share-based compensation resulting from equity awards
that we recorded in our income statements for the three and six months ended March 31, 2010 and 2009:



|                                    |  |                              |       |                           |   |       |  |      |       |  |   |      
|----------------------------------- |  | ---------------------------- | ----- | ------------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                                    |  | Three Months 
EndedMarch 31, |       | Six Months
EndedMarch 31,
|                                    |  | 2010                         |       | 2009                      |   | 2010  |  | 2009
|Cost of operations                  |  | $                            | 597   |                           | $ | 326   |  | $    | 1,081 |  | $ | 710  
|Sales and marketing                 |  |                              | 1,786 |                           |   | 844   |  |      | 3,493 |  |   | 1,847
|Systems development and programming |  |                              | 576   |                           |   | 373   |  |      | 1,076 |  |   | 806  
|General and administrative          |  |                              | 907   |                           |   | 598   |  |      | 1,715 |  |   | 1,281
|                                    |  |                              |       |                           |   |       |  |      |       |  |   |      
|Total share-based compensation      |  | $                            | 3,866 |                           | $ | 2,141 |  | $    | 7,365 |  | $ | 4,644
|                                    |  |                              |       |                           |   |       |  |      |       |  |   |      

Net cash proceeds from the exercise of stock options
were $1.6 million and $2.7 million for the three and six months ended March 31, 2010, and $0.3 million and $2.1 million for the same periods in 2009. For the three and six month periods ended March 31, 2010 and 2009, we did not realize any
income tax benefits or deficiencies from stock option exercises. We present excess tax benefits from the exercise of stock options, if any, as financing cash flows rather than operating cash flows.

The following table presents our stock option activity for the six months ended March 31, 2010:



|                                     |  |        |   |  |                               |      |                                         |      |                         |   |       
|------------------------------------ |  | ------ | - |  | ----------------------------- | ---- | --------------------------------------- | ---- | ----------------------- | - | ------
|                                     |  | Shares |   |  | WeightedAverageExercise Price |      | WeightedAverageRemainingContractualTerm |      | AggregateIntrinsicValue
|Outstanding as of September 30, 2009 |  | 3,168  |   |  | $                             | 6.95 |                                         |      |                         |   |       
|Exercised                            |  | (467   | ) |  |                               | 5.75 |                                         |      |                         |   |       
|Forfeited or expired                 |  |       |   |  |                               |     |                                         |      |                         |   |       
|                                     |  |        |   |  |                               |      |                                         |      |                         |   |       
|Outstanding as of March 31, 2010     |  | 2,701  |   |  |                               | 7.06 |                                         | 3.33 |                         | $ | 91,443
|                                     |  |        |   |  |                               |      |                                         |      |                         |   |       
|Exercisable as of March 31, 2010     |  | 2,697  |   |  |                               | 7.04 |                                         | 3.33 |                         |   | 91,326
|                                     |  |        |   |  |                               |      |                                         |      |                         |   |       

For the six months ended March 31, 2010, the total intrinsic value of options exercised was
$19.4 million.

RSUs are awards that entitle the holder to shares of our common stock as the award vests. Our RSUs generally
vest over four years, but may accelerate in certain circumstances. The compensation expense incurred for RSUs is based on the closing market price of our common stock on the date of grant and is amortized ratably on a straight-line basis over the
requisite service period.

The following table presents a summary of RSU award activity for the six months ended
March 31, 2010:



|                                     |  |        |   |  |                            |      
|------------------------------------ |  | ------ | - |  | -------------------------- | -----
|                                     |  | Shares |   |  | WeightedAverage ShareValue
|Outstanding as of September 30, 2009 |  | 1,327  |   |  | $                          | 24.86
|Granted                              |  | 440    |   |  |                            | 39.58
|Vested and released                  |  | (332   | ) |  |                            | 25.78
|Cancelled                            |  | (14    | ) |  |                            | 22.60
|                                     |  |        |   |  |                            |      
|Outstanding as of March 31, 2010     |  | 1,421  |   |  |                            | 29.27
|                                     |  |        |   |  |                            |      



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS(Continued)

March 31, 2010

(Unaudited)



As of March 31, 2010, we expect $24.4 million of total unrecognized compensation
costs related to non-vested stock options and RSUs to be recognized over a weighted average period of 1.8 years. For the six months ended March 31, 2010, the total grant date fair value of options and RSUs vested was $14.6 million, compared to
$4.9 million for the same period in 2009.

Note 11. Fair Value Measurements

The accounting guidance for fair value measurements and its subsequent updates establishes a three-tier fair value hierarchy, categorizing
the inputs used to measure fair value. The hierarchy can be described as follows: Level 1- observable inputs such as quoted prices in active markets; Level 2- inputs other than the quoted prices in active markets that are observable either directly
or indirectly; and Level 3- unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The fair value hierarchy also requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value.

We have highly liquid investments classified as cash
equivalents and short-term investments included in our balance sheet. Cash equivalents consist of money market instruments and commercial paper that have original maturities of 90 days or less. We also invest in commercial paper with maturities
greater than 90 days but generally mature within 270 days. Such instruments are classified within Level 2 of the fair value hierarchy. We had no financial liabilities measured at fair value on a recurring basis at March 31, 2010.

Our financial assets measured at fair value as of March 31, 2010, are summarized below:



|                              |  |                              |       |                     |   |         |  |   |   |  |   |        
|----------------------------- |  | ---------------------------- | ----- | ------------------- | - | ------- |  | - | - |  | - | -------
|                              |  | Fair Value Measurement Using |       | Assets atFair
Value
|                              |  | Level 1                      |       | Level 2             |   | Level 3 | 
|Assets:                       |  |                              |       |                     |   |         |  |   |   |  |   |        
|Money market accounts         |  | $                            | 4,578 |                     | $ |        |  | $ |  |  | $ | 4,578  
|Commercial paper              |  |                              |      |                     |   | 147,394 |  |   |  |  |   | 147,394
|Other fixed income securities |  |                              |      |                     |   | 38,868  |  |   |   |  |   | 38,868 
|                              |  |                              |       |                     |   |         |  |   |   |  |   |        
|Total                         |  | $                            | 4,578 |                     | $ | 186,262 |  | $ |  |  | $ | 190,840
|                              |  |                              |       |                     |   |         |  |   |   |  |   |        

Equity Investment in Private Company

During 2009 and 2010, we have made investments in RideCharge. The valuation of investments in non-public companies requires
significant management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such assets. As of March 31, 2010, this investment is recorded at $6.0 million in Investments on our
balance sheet.

The investment in RideCharge will be subject to fair value adjustments in certain circumstances, such as when
there is evidence of impairment. We will record impairment charges when an investment has experienced a decline that we deem to be other-than-temporary. The determination that a decline is other-than-temporary is, in part, subjective and influenced
by many factors. Future adverse changes in market conditions or poor operating results of an investee could result in losses or an inability to recover the carrying value of our investment. When assessing our investments for other-than-temporary
declines in value, we will consider many factors, including but not limited to the following: the performance of the investee in relation to its own operating targets and its business plan; the investees revenue and cost trends; the
investees liquidity and cash position; and market acceptance of the investees products and services. From time to time, we may consider third-party evaluations. In the event an investment experiences other-than-temporary declines in
value, we will record an impairment loss in Other income (expense) in our income statement.



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##### Table of Contents

Concur Technologies, Inc.

NOTES TO FINANCIAL STATEMENTS(Continued)

March 31, 2010

(Unaudited)



Note 12. Comprehensive Income

The following table presents the components of our comprehensive income:



|                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------- | ------ | - | ------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Three Months EndedMarch 31, |        |   | Six Months EndedMarch 31, |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2010                        |        |   | 2009                      |   |        | 2010 |  |   | 2009    |  
|Net income                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | $                           | 6,827  |   |                           | $ | 6,749  |      |  | $ | 13,369  |   |  | $ | 12,558  |  
|Other comprehensive gain (loss):                                                                                                                                                                                                                                                                                                                                                                                                           |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Foreign currency translation adjustment loss                                                                                                                                                                                                                                                                                                                                                                                               |  |                             | (2,028 | ) |                           |   | (298   | )    |  |   | (2,505  | ) |  |   | (2,258  | )
|Net unrealized gain (loss) on investments, net of tax                                                                                                                                                                                                                                                                                                                                                                                      |  |                             | (31    | ) |                           |   |       |      |  |   | 2       |   |  |   |        |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Total comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                 |  | $                           | 4,768  |   |                           | $ | 6,451  |      |  | $ | 10,866  |   |  | $ | 10,300  |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Note 13. Segment Reporting
 We operate in and report on one segment, which is on-demand
Employee Spend Management Solutions.We market our services and products primarily in the United States and operate in a single industry segment. For the three and six months ended March 31, 2010 and 2009, no single customer accounted
for more than 10% of our total revenues. The following table presents our revenues by geographic region: | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | Three Months EndedMarch 31, |        |   | Six Months
EndedMarch 31, |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 2010                        |        |   | 2009                      |   |        | 2010 |  |   | 2009    |  
|United States                                                                                                                                                                                                                                                                                                                                                                                                                              |  | $                           | 63,920 |   |                           | $ | 55,922 |      |  | $ | 122,856 |   |  | $ | 108,831 |  
|Europe                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                             | 5,785  |   |                           |   | 3,463  |      |  |   | 11,737  |   |  |   | 6,595   |  
|Other                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                             | 3,111  |   |                           |   | 2,606  |      |  |   | 5,876   |   |  |   | 5,129   |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  
|Total revenues                                                                                                                                                                                                                                                                                                                                                                                                                             |  | $                           | 72,816 |   |                           | $ | 61,991 |      |  | $ | 140,469 |   |  | $ | 120,555 |  
|                                                                                                                                                                                                                                                                                                                                                                                                                                           |  |                             |        |   |                           |   |        |      |  |   |         |   |  |   |         |  

Note 14. Contingencies

Product Warranty and Indemnification Obligations

We provide services and software solutions to our customers under sales contracts, which usually include a limited warranty regarding
product and service performance and a limited indemnification of customers against losses, expenses and liabilities from damages that may be awarded against them if our services or software are found to infringe upon a patent, copyright, trademark,
or other proprietary right of a third party. The contracts generally limit the scope of and remedies for such indemnification obligations in a variety of industry-standard respects. We also enter into similar limited indemnification terms in
agreements with certain strategic business partners and vendors. To date, we have experienced minimal warranty claims and have not had to reimburse any customers for any losses related to the limited indemnification described above.

Legal Matters

From time to time we are involved in legal proceedings that arise in the ordinary course of our business. Any such proceedings, whether
meritorious or not, could be time consuming, costly, and result in the diversion of significant operational resources or management time.

Although the outcomes of legal proceedings are inherently difficult to predict, we are not currently involved in any legal proceeding in
which the outcome, in our judgment based on information currently available, is likely to have a material adverse effect on our business or financial position.



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Our Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) provides
information that we believe is relevant to an assessment and understanding of our results of operations and financial condition. This discussion should be read in conjunction with the Financial Statements and Notes that are included with this
report. Also, the discussion of Critical Accounting Policies and Estimates in this section is an integral part of the analysis of our results of operations and financial condition.

Throughout this MD&A, we refer to Concur Technologies, Inc. as Concur, we, us and
our. We report our operating results on a fiscal year basis that starts October 1 and ends September 30. We refer to our fiscal years ended September 30, 2009, 2010 and 2011, as 2009, 2010 and
2011. Throughout this MD&A, where we provide discussion of the three and six months ended March 31, 2010, and we provide data for the same period in the prior year, we will refer to the prior period as 2009. All
dollar, option and share amounts (other than per share dollar amounts) are reported in thousands, unless otherwise noted.

Special Note Regarding Forward-Looking Statements

This document contains forward-looking statements regarding our plans, objectives, expectations, intentions, future financial performance,
future financial condition, and other statements that are not historical facts. These statements can be identified by our use of the future tense, or by forward-looking words such as may, will, expect,
anticipate, believe, intend, estimate, continue and other similar words and phrases. These forward-looking statements involve many risks and uncertainties, described in Part II,
Item 1A, Risk Factors, as well as in our other filings with the Securities and Exchange Commission (SEC). The occurrence of any of these risks and uncertainties may cause our actual results to differ materially from those
anticipated in our forward-looking statements, which could have a material adverse effect on our business, results of operations, and financial condition. All forward-looking statements included in this report are based on information available to
us as of the date of this report. We undertake no obligation to revise or update any such forward-looking statements for any reason.

Overview

We are a leading provider of on-demand Employee Spend Management solutions. Our integrated travel and expense software solutions enable
organizations to control costs by automating the processes used to manage employee spending. Our solutions unite online travel procurement with automated expense reporting, streamline corporate event management, and optimize the process of managing
vendor payments, employee check requests and direct reimbursements. Our unified approach to managing these processes provides our customers with visibility into their employee spending, which helps them analyze trends, influence budget decisions,
improve forecasting, and monitor and enforce compliance with their corporate policies and external regulations, such as the Sarbanes-Oxley Act of 2002.

We generate our revenues predominantly from the delivery of subscription services, and to a much lesser degree from consulting services
and other services, which includes the sale of software licenses. Our subscription services revenues are recognized over the time period we provide our services to customers, in contrast to license revenues, which typically are recognized upon
software delivery to the customer.

On August 1, 2009, we completed the acquisition of Etap-On-Line (Etap
Acquisition). Etap-On-Line is a leading European provider of business travel and expense management solutions, based in Paris, France. The Etap Acquisition is expected to strengthen our operations and client base in the European market.



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##### Table of Contents

In March 2010, we issued at par value $250.0 million principal amount of 2.50% senior
convertible notes due in 2015 (the Initial Notes). In addition, the underwriters were granted an over-allotment option to purchase an additional $37.5 million principal amount of 2.50% senior convertible notes due in 2015, which brings
the total amount issued under such notes and the Initial Notes to $287.5 million (collectively, the Notes). The overallotment option was exercised in full on April 1, 2010 and therefore is not reflected in our March 31, 2010 financial
statements.

In March 2010 we also entered into note hedge and warrant transactions that cover the number of shares of our
common stock that are underlying the Notes. The note hedge transactions are designed, but not guaranteed, to reduce or eliminate the potential economic dilution arising upon conversion. We also sold warrants to acquire shares of our common stock at
a strike price of $73.29.

Our strategic focus in 2010 is to continue to grow our core subscription business and to reduce our
cost of deploying and operating our services as a percentage of revenue. We expect our subscription revenues to increase in 2010 compared to 2009 due to anticipated growth in demand. We expect our sales and marketing expenses to increase on both an
absolute basis and as a percentage of revenues in 2010 compared to 2009, primarily reflecting our continued emphasis on growing our sales and marketing personnel to support expected demand and create additional awareness in our target market. In
recent quarters, we have observed trends of declining travel transactions, increased unemployment and business contraction generally, which tend to reduce revenue, we believe they will be outweighed by cross-selling additional services and expansion
of our customer base.

We operate in and report on one segment, which is on-demand Employee Spend Management solutions.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2010 AND 2009

Selected Financial Data

The following table presents financial data derived from our unaudited income statements as a percentage of total revenues for the periods
indicated.



|                                    |  |                             |   |  |                           |   |  |       |   |  |       |  
|----------------------------------- |  | --------------------------- | - |  | ------------------------- | - |  | ----- | - |  | ----- | -
|                                    |  | Three Months EndedMarch
31, |   |  | Six Months EndedMarch 31, |  
|                                    |  | 2010                        |   |  | 2009                      |   |  | 2010  |   |  | 2009  |  
|Revenue                             |  | 100.0                       | % |  | 100.0                     | % |  | 100.0 | % |  | 100.0 | %
|Expenses:                           |  |                             |   |  |                           |   |  |       |   |  |       |  
|Cost of operations                  |  | 29.5                        |   |  | 30.5                      |   |  | 29.7  |   |  | 30.5  |  
|Sales and marketing                 |  | 31.2                        |   |  | 28.7                      |   |  | 31.0  |   |  | 29.2  |  
|Systems development and programming |  | 9.8                         |   |  | 10.0                      |   |  | 10.0  |   |  | 10.3  |  
|General and administrative          |  | 11.9                        |   |  | 11.0                      |   |  | 11.6  |   |  | 11.6  |  
|Amortization of intangible assets   |  | 2.5                         |   |  | 2.5                       |   |  | 2.6   |   |  | 2.6   |  
|                                    |  |                             |   |  |                           |   |  |       |   |  |       |  
|Total expenses                      |  | 84.9                        |   |  | 82.7                      |   |  | 84.9  |   |  | 84.2  |  
|                                    |  |                             |   |  |                           |   |  |       |   |  |       |  
|Operating income                    |  | 15.1                        |   |  | 17.3                      |   |  | 15.1  |   |  | 15.8  |  
|Other income (expense):             |  |                             |   |  |                           |   |  |       |   |  |       |  
|Interest income                     |  | 0.4                         |   |  | 0.5                       |   |  | 0.4   |   |  | 1.2   |  
|Interest expense                    |  | (0.6                        | ) |  | (0.2                      | ) |  | (0.4  | ) |  | (0.2  | )
|Other, net                          |  | (0.4                        | ) |  | (0.6                      | ) |  | (0.3  | ) |  | (0.5  | )
|                                    |  |                             |   |  |                           |   |  |       |   |  |       |  
|Total other income (expense), net   |  | (0.6                        | ) |  | (0.3                      | ) |  | (0.3  | ) |  | 0.5   |  
|                                    |  |                             |   |  |                           |   |  |       |   |  |       |  
|Income before income tax            |  | 14.5                        |   |  | 17.0                      |   |  | 14.8  |   |  | 16.3  |  
|Income tax expense                  |  | 5.1                         |   |  | 6.1                       |   |  | 5.3   |   |  | 5.9   |  
|                                    |  |                             |   |  |                           |   |  |       |   |  |       |  
|Net income                          |  | 9.4                         | % |  | 10.9                      | % |  | 9.5   | % |  | 10.4  | %
|                                    |  |                             |   |  |                           |   |  |       |   |  |       |  



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##### Table of Contents

Results of Operations

Revenues



|         |  |                             |        |      |                           |        |  |      |      |  |      |         |        |   |         |  |      |  
|-------- |  | --------------------------- | ------ | ---- | ------------------------- | ------ |  | ---- | ---- |  | ---- | ------- | ------ | - | ------- |  | ---- | -
|         |  | Three Months EndedMarch
31, |        |      | Six Months EndedMarch
31, |       
|         |  | 2010                        |        | 2009 |                           | Change |  |      | 2010 |  | 2009 |         | Change |  
|Revenues |  | $                           | 72,816 |      | $                         | 61,991 |  | 17.5 | %    |  | $    | 140,469 |        | $ | 120,555 |  | 16.5 | %



|               |  |                             |        |   |                           |   |      |   |        |  |       |      |  |   |         |  |       |   |   |   |         |  |       |  
|-------------- |  | --------------------------- | ------ | - | ------------------------- | - | ---- | - | ------ |  | ----- | ---- |  | - | ------- |  | ----- | - | - | - | ------- |  | ----- | -
|               |  | Three Months EndedMarch 31, |        |   | Six Months EndedMarch 31, |  
|               |  | 2010                        |        | % |                           |   | 2009 |   | %      |  |       | 2010 |  | % |         |  | 2009  |   | % |  
|United States  |  | $                           | 63,920 |   | 87.7                      | % |      | $ | 55,922 |  | 90.2  | %    |  | $ | 122,856 |  | 87.5  | % |   | $ | 108,831 |  | 90.3  | %
|Europe         |  |                             | 5,785  |   | 8.0                       | % |      |   | 3,463  |  | 5.6   | %    |  |   | 11,737  |  | 8.3   | % |   |   | 6,595   |  | 5.5   | %
|Other          |  |                             | 3,111  |   | 4.3                       | % |      |   | 2,606  |  | 4.2   | %    |  |   | 5,876   |  | 4.2   | % |   |   | 5,129   |  | 4.2   | %
|               |  |                             |        |   |                           |   |      |   |        |  |       |      |  |   |         |  |       |   |   |   |         |  |       |  
|Total revenues |  | $                           | 72,816 |   | 100.0                     | % |      | $ | 61,991 |  | 100.0 | %    |  | $ | 140,469 |  | 100.0 | % |   | $ | 120,555 |  | 100.0 | %
|               |  |                             |        |   |                           |   |      |   |        |  |       |      |  |   |         |  |       |   |   |   |         |  |       |  

Revenues. Revenues consist primarily of fees paid for subscription services. To a much lesser
degree, revenues also include the amortization of set-up fees paid to us in connection with subscription services, and the amortization of fees paid for software maintenance services under software license arrangements and in multiple element
subscription arrangements where there is no vendor specific objective evidence of fair value for an undelivered subscription element. Revenues are affected by pricing, the number of new customers, customer contract durations and our customer
retention rate.

Revenues increased 17.5%, or $10.8 million, for the three months ended March 31, 2010, and 16.5%, or
$19.9 million, for the six months ended March 31, 2010, compared to the same periods in 2009. The increase was primarily due to the increased number of customers for our subscription services. The growth in customers reflects increased market
demand for our subscription services and high rates of retention of existing subscription customers. We believe this demand reflects the markets growing awareness of our on-demand Employee Spend Management Solutions and the increasing
acceptance of outsourced services, driven in part by limited information technology capital budgets.

We expect revenues to
continue to grow in 2010 as a result of customer growth and to a lesser extent increased revenue per customer, in part due to our planned increase in spending on sales and marketing.

International Revenues. Revenues from customers outside the United States represented 12% and 13% of total revenues for the
three and six months ended March 31, 2010, compared to 10% for the same periods in 2009. We expect our international revenues to grow in the near term, as our products and services continue to gain acceptance in international markets, due to
our Etap Acquisition, our investment in global distribution and increased global awareness of our products.Historically, fluctuations in foreign currency exchange rates have not had a material effect on our operating results.

Expenses



|                                    |  |                             |        |      |                           |        |  |      |      |  |      |         |        |   |         |  |      |  
|----------------------------------- |  | --------------------------- | ------ | ---- | ------------------------- | ------ |  | ---- | ---- |  | ---- | ------- | ------ | - | ------- |  | ---- | -
|                                    |  | Three Months EndedMarch
31, |        |      | Six Months EndedMarch
31, |       
|                                    |  | 2010                        |        | 2009 |                           | Change |  |      | 2010 |  | 2009 |         | Change |  
|Cost of operations                  |  | $                           | 21,521 |      | $                         | 18,938 |  | 13.6 | %    |  | $    | 41,692  |        | $ | 36,812  |  | 13.3 | %
|Sales and marketing                 |  |                             | 22,712 |      |                           | 17,770 |  | 27.8 | %    |  |      | 43,484  |        |   | 35,332  |  | 23.1 | %
|Systems development and programming |  |                             | 7,127  |      |                           | 6,187  |  | 15.2 | %    |  |      | 14,017  |        |   | 12,379  |  | 13.2 | %
|General and administrative          |  |                             | 8,636  |      |                           | 6,793  |  | 27.1 | %    |  |      | 16,350  |        |   | 13,981  |  | 16.9 | %
|Amortization of intangible assets   |  |                             | 1,833  |      |                           | 1,541  |  | 18.9 | %    |  |      | 3,688   |        |   | 3,082   |  | 19.7 | %
|                                    |  |                             |        |      |                           |        |  |      |      |  |      |         |        |   |         |  |      |  
|Total operating expenses            |  | $                           | 61,829 |      | $                         | 51,229 |  | 20.7 | %    |  | $    | 119,231 |        | $ | 101,586 |  | 17.4 | %
|                                    |  |                             |        |      |                           |        |  |      |      |  |      |         |        |   |         |  |      |  

Cost of Operations. Cost of operations expenses consist primarily of salaries and
related expenses (including travel related expenses) and allocated overhead costs (including depreciation, occupancy, insurance, telecommunications and computer equipment expenses) associated with employees and contractors who provide our
subscription and consulting services. Cost of operations expenses also include co-location and related telecommunications costs, fees paid to third parties for referrals, resale arrangements, royalties and amortization of deferred set-up costs that
we incur in connection with our subscription services.



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Cost of operations expenses as a percentage of total revenues decreased to 29.5% and 29.7%
for the three and six months ended March 31, 2010, compared to 30.5% for the same periods in 2009. Cost of operations expenses increased by 13.6%, or $2.6 million, for the three months ended March 31, 2010, and 13.3%, or $4.9 million, for
the six months ended March 31, 2010, compared to the same periods in 2009. Total salaries and related expenses increased by 10.1%, or $1.0 million for the three months ended March 31, 2010, and 9.7%, or $1.9 million, for the six months
ended March 31, 2010, compared to the same periods in 2009. Allocated overhead costs increased by 9.8%, or $0.4 million for the three months ended March 31, 2010, and 9.1%, or $0.7 million for the six months ended March 31, 2010,
compared to the same periods in 2009. Initial set-up costs that we incur in connection with our subscription services increased by 19.7%, or $0.9 million, for the three months ended March 31, 2010, and 19.2%, or $1.7 million, for the six months
ended March 31, 2010, compared to the same periods in 2009. These increases were primarily due to an increase in headcount and growth of the business.

We expect cost of operations expenses to continue to trend down as a percentage of total revenues over the long term, because the
incremental cost to deploy and support each new customer is expected to decrease due to economies of scale anticipated in our subscription service model infrastructure. We anticipate that cost of operations will increase in absolute dollars as we
continue to expand our capacity to deploy and support additional new customers.

Sales and Marketing. Sales and
marketing expenses consist of salaries and related expenses (including sales commissions and travel related expenses) and allocated overhead costs associated with our sales and marketing personnel, miscellaneous sales and marketing costs, such as
advertising, trade shows and other promotional activities

Sales and marketing expenses as a percentage of total revenues
increased to 31.2% and 31.0% for the three and six months ended March 31, 2010, compared to 28.7% and 29.2% for the same periods in 2009. Sales and marketing expenses increased by 27.8%, or $4.9 million, for the three months ended
March 31, 2010, and 23.1%, or $8.2 million, for the six months ended March 31, 2010, compared to the same periods in 2009. Total salaries and related expenses increased by 22.1%, or $2.9 million, for the three months ended March 31,
2010, and 18.5%, or $4.7 million, for the six months ended March 31, 2010, compared to the same periods in 2009. Allocated overhead costs increased by 87.1%, or $1.6 million, for the three months ended March 31, 2010, and 52.2%, or $2.4
million, for the six months ended March 31, 2010, compared to the same periods in 2009. Initial costs that we incur in connection with our subscription services increased by 31.4%, or $0.8 million, for the three months ended March 31,
2010, and 34.7%, or $1.6 million, for the six months ended March 31, 2010, compared to the same periods in 2009. These increases were primarily attributable to an increase in sales personnel and marketing programs. These increases were
partially offset by a decrease in royalty and referral fee expenses of 77.3%, or $0.3 million, for the three months ended March 31, 2010, and 76.9%, or $0.6 million, for the six months ended March 31, 2010, compared to the same periods in
2009.

We expect total sales and marketing expenses in 2010 to increase as a percentage of revenue and in absolute dollars
compared to 2009, driven primarily by an increase in sales personnel and marketing programs globally. These increases reflect a key part of our strategic focus in 2010, which is to ensure that our sales and marketing efforts are expanded to create
awareness in our target markets to support expected demand.

Systems Development and Programming Costs. Systems
development and programming costs consist of salaries and related expenses and allocated overhead costs associated with employees and contractors engaged in software engineering, program management and quality assurance.

Systems development and programming costs as a percentage of total revenues decreased to 9.8% and 10.0% for the three and six months
ended March 31, 2010, compared to 10.0% and 10.3% for the same periods in 2009. This decrease reflects our higher revenues compared to relatively stable



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expenses in this area. Systems development and programming costs increased 15.2%, or $0.9 million, for the three months ended March 31, 2010, and 13.2%, or $1.6 million, for the six months
ended March 31, 2010, compared to the same periods in 2009. Total salaries and related expenses increased by 13.8%, or $0.5 million, for the three months ended March 31, 2010, and 10.1%, or $0.7 million, for the six months ended
March 31, 2010, compared to the same periods in 2009. Allocated overhead costs increased by 17.1%, or $0.4 million, for the three months ended March 31, 2010, and 17.9%, or $0.9 million, for the six months ended March 31, 2010,
compared to the same periods in 2009. These increases were primarily due to the growth of the business.

In response to the
demand for our subscription services, the majority of our systems and development resources are focused on developing internal-use software used to provide these services to our customers. We capitalize costs in accordance with accounting principles
generally accepted in the United States (GAAP) for corporate software developed or obtained for internal use and amortize it over its useful life. Capitalized internal-use software costs, net of amortization, increased $0.8 million, from
$16.5 million at September 30, 2009, to $17.3 million at March 31, 2010.

We anticipate that recognized systems
development and programming costs in 2010 will increase in absolute dollars and remain relatively consistent as a percentage of revenue compared to 2009 as we continue to focus on product innovation and enhancement.

General and Administrative. General and administrative expenses consist of salaries and related expenses and allocated
overhead costs, all associated with employees and contractors in finance, human resources, legal and facilities, as well as miscellaneous costs, such as professional fees and public company regulatory compliance costs.

General and administrative expenses as a percentage of total revenues increased to 11.9% for the three months ended March 31, 2010,
compared to 11.0% for the same period in 2009. General and administrative expenses as a percentage of total revenues remained unchanged at 11.6% for the six months ended periods March 31, 2010 and 2009. General and administrative expense
increased by 27.1%, or $1.8 million, for the three months ended March 31, 2010, and 16.9%, or $2.4 million, for the six months ended March 31, 2010, compared to the same periods in 2009. These increases are primarily due to the growth of
the business and increases in salaries and related expenses.

We expect the absolute dollar amount of general and
administrative expenses to increase in 2010 compared to 2009 due to increases in personnel costs related to the growth of our business. However, we expect general and administrative costs as a percentage of revenue to remain relatively consistent
with 2009 due to economies of scale.

Amortization of Intangible Assets. Amortization of intangible assets
represents the amortization of the intangible assets from acquisitions. We are amortizing our intangible assets as non-cash charges to operations over an expected useful life which is consistent with the timing and level of expected cash flows
attributed to customer relationships, use of acquired technology, trade name and trademarks, and non-compete agreements.

Interest Income, Interest Expense and Other



|                        |  |                             |      |   |                           |   |      |        |  |       |      |  |   |      |   |  |        |       |   |  |        |   
|----------------------- |  | --------------------------- | ---- | - | ------------------------- | - | ---- | ------ |  | ----- | ---- |  | - | ---- | - |  | ------ | ----- | - |  | ------ | --
|                        |  | Three Months EndedMarch 31, |      |   | Six Months EndedMarch 31, |  
|                        |  | 2010                        |      |   | 2009                      |   |      | Change |  |       | 2010 |  |   | 2009 |   |  | Change |      
|Interest income         |  | $                           | 294  |   |                           | $ | 322  |        |  | (8.7  | )%   |  | $ | 605  |   |  | $      | 1,468 |   |  | (58.8  | )%
|Interest expense        |  |                             | (440 | ) |                           |   | (117 | )      |  | 276.1 | %    |  |   | (543 | ) |  |        | (250  | ) |  | 117.2  | % 
|Other, net              |  |                             | (332 | ) |                           |   | (422 | )      |  | (21.3 | )%   |  |   | (492 | ) |  |        | (567  | ) |  | (13.2  | )%
|                        |  |                             |      |   |                           |   |      |        |  |       |      |  |   |      |   |  |        |       |   |  |        |   
|Total other income, net |  | $                           | (478 | ) |                           | $ | (217 | )      |  | 120.3 | %    |  | $ | (430 | ) |  | $      | 651   |   |  | (166.1 | )%
|                        |  |                             |      |   |                           |   |      |        |  |       |      |  |   |      |   |  |        |       |   |  |        |   

Interest income decreased for the three and six months ended March 31, 2010, compared to the
same periods in 2009, due to lower interest rates during 2010 compared to 2009. We record realized gains and losses on fluctuations in exchange rates in the Other income (expense) section of the income statement. We expect interest expense to be
significantly higher in fiscal 2010 compared to 2009 because of the interest expense associated with our 2010 issuance of the Notes. We also expect interest income to be higher as a result of the investment of the proceeds of that offering pending
use.



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Income Tax Expense



|                   |  |                             |       |      |                           |        |  |      |      |  |      |       |        |   |       |  |     |  
|------------------ |  | --------------------------- | ----- | ---- | ------------------------- | ------ |  | ---- | ---- |  | ---- | ----- | ------ | - | ----- |  | --- | -
|                   |  | Three Months EndedMarch 31, |       |      | Six Months EndedMarch 31, |       
|                   |  | 2010                        |       | 2009 |                           | Change |  |      | 2010 |  | 2009 |       | Change |  
|Income tax expense |  | $                           | 3,682 |      | $                         | 3,796  |  | (3.0 | )%   |  | $    | 7,439 |        | $ | 7,062 |  | 5.3 | %

We are subject
to income taxes both in the U.S. and numerous foreign jurisdictions. We make estimates and judgments in determining income tax expense for financial statement purposes. We also make estimates and judgments in the calculation of certain tax assets
and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

We measure and recognize uncertain tax positions. To recognize such positions we must first determine if is more likely than not that the
position will be sustained on audit. We then must measure the benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. Since we are in a net operating loss position for those positions that require a
reserve we do not include interest and penalties related to our contingencies in our income tax expense.

Financial
Condition

Our total assets increased by 42.5%, or $285.3 million, to $956.1 million at March 31, 2010, from
$670.9 million at September 30, 2009. This increase is primarily due to the $265.2 million receivable from our Initial Notes and the Warrants.

Our total current liabilities increased by 44.1%, or $55.1 million, to $180.2 million at March 31, 2010, from $125.1 million at
September 30, 2009. This increase is primarily due to the $52.3 million payable from the note hedge transactions that we entered into in connection with our Initial Notes.

Our additional paid in capital increased by 4.1%, or $26.3 million, to $667.2 million at March 31, 2010, from $640.9 million at
September 30, 2009. The increase was primarily due to the equity component of our Initial Notes, the share-based compensation recognized during the periods, and the purchase of stock under our employee stock purchase plan.

Liquidity and Capital Resources

Our available sources of liquidity as of March 31, 2010, consisted principally of cash and cash equivalents totaling $163.0 million.
In addition, we completed our Notes offering, which is discussed in more detail below.

Our operating cash inflows consist of
payments received from our customers related to our subscription and other product offerings. Our operating cash outflows consist of employee salaries, payments to vendors directly related to our services, payments under arrangements with third
parties who provide hosting infrastructure services in connection with our subscription services offerings, related sales and marketing and administrative costs, cost of operations and systems development and programming costs. Net cash provided by
operating activities was $18.2 million and $32.4 million for the three and six months ended March 31, 2010, compared to $23.7 million and $27.5 million for the same periods in 2009. Cash provided by operating activities was primarily affected
by changes in working capital accounts, particularly in accounts receivable for the three and six months ended March 31, 2010 and 2009.

Cash provided by (used in) investing activities corresponds with purchases, sales, and maturities of investments, cash outlays for
acquisitions, purchases of fixed assets, including leasehold improvements and internal-use software and changes in customer funding liabilities, net of the change in restricted cash. Our investing activities provided $28.6 million and $12.7 million
for the three and six months ended March 31,



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2010, compared to cash used of $6.8 million and $13.5 million for the same periods in 2009. The net maturities of our short-term investments provided cash of $16.2 million and $19.5 million for
the three and six months ended March 31, 2010. Purchases of property and equipment were $4.0 million and $7.7 million for the three and six months ended March 31, 2010, compared to $4.9 million and $10.5 million for the same periods in
2009. The increase in customer funding liabilities, net of changes in restricted cash resulted in $20.8 million and $6.4 million in cash provided for the three and six months ended March 31, 2010, compared to $2.3 million and $1.2
million for the same periods in 2009.

Our financing activities used $2.4 million and $1.3 million for the three and six
months ended March 31, 2010, compared to $4.2 million and $57.2 million for the same periods in 2009. Financing activities included $54.8 million in cash used for repurchases of our common stock during the six months ended March 31, 2009.
The exercise of stock options, net of the change in withholding taxes paid for equity awards on behalf of our employees used $2.6 million and $1.5 million for the three and six months ended March 31, 2010, compared to $0.9 million cash used and
$0.9 million cash provided for the same periods in 2009. Included in financing activities for the three months ending March 31, 2009, is a $2.8 million payment for common stock issuance costs for the 6.4 million shares issued to American
Express Travel Related Services Company, Inc. in 2008.

On March 29, 2010, we terminated a credit agreement with a
financial institution that provided for a revolving credit facility for up to $70 million that was set to expire in September 2012, or earlier as provided in the credit agreement. As of March 29, 2010, we were in compliance with all loan
covenants under the terms of the credit agreement, and had no outstanding borrowings under the agreement.

In March 2010, we
issued Notes, Note Hedges and Warrants. The Notes will mature on April 15, 2015, unless earlier converted. As of March 31, 2010 we recorded a receivable of $265.2 million from the Initial Notes and Warrants on our balance sheet. In addition, we
recorded a payable of $52.3 million for the Note Hedges, which is shown in Note Hedges Payable on our March 31, 2010, balance sheet. All amounts in connection with the Notes, Note Hedges, and Warrants were settled in cash in April 2010.
As of March 31, 2010, the Notes have not been repurchased or converted. We also have not received any shares under the Note Hedges or delivered cash or shares under the Warrants. For further information, see Note 8 to the notes to consolidated
financial statements.

Our Board of Directors previously authorized a stock repurchase program (Repurchase
Program) that allowed us to repurchase up to 7.0 million shares of our common stock through January 2011. In December 2009, our Board of Directors extended the Repurchase Program for an additional two-year period expiring in January 2013,
and increased the number of shares eligible for repurchase by an additional 2.0 million shares, from 7.0 million shares to 9.0 million shares. We may repurchase our common stock from time to time in the open market based on market
conditions. Any repurchases will be made at the then-current market prices, and repurchased shares will be retired. As of March 31, 2010, 4.1 million shares remained eligible for repurchase under the Repurchase Program. We did not have any
stock repurchases during the three months ended March 31, 2010.

We believe our cash and cash equivalents, amounts
available under existing credit arrangements, as well as expected positive operating cash flows, will be sufficient to meet our anticipated cash needs for normal business operations, working capital needs and capital expenditures for at least the
next 12 months. In the longer term, or if we decide to acquire assets or businesses, we may require additional funds and may seek to raise such additional funds through private or public sales of debt or equity securities, or securities convertible
or exchangeable into such securities, strategic relationships, bank debt, lease financing arrangements or other available means. There can be no assurances that any such funds will be available or, if they are available, that they will be available
on acceptable terms to meet our business needs. If additional funds are raised through the issuance of equity securities, stockholders may experience dilution, or such equity securities may have rights, preferences, or privileges senior to those of
the holders of our common stock.



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Contractual Obligations and Commercial Commitments

The following table summarizes our outstanding contractual obligations as of March 31, 2010:



|                                                 |  |                                             |         |               |   |                 |  |                     |        |  |   |      
|------------------------------------------------ |  | ------------------------------------------- | ------- | ------------- | - | --------------- |  | ------------------- | ------ |  | - | -----
|Years ending September 30,                       |  | ConvertibleSenior 
Notes,including interest |         | CapitalLeases |   | OperatingLeases |  | PurchaseObligations
|2010 (April 1, 2010, through September 30, 2010) |  |                                             | 3,125   |               |   | 578             |  |                     | 1,675  |  |   | 911  
|2011                                             |  |                                             | 6,250   |               |   | 199             |  |                     | 3,138  |  |   | 1,622
|2012                                             |  |                                             | 6,250   |               |   |                |  |                     | 3,302  |  |   | 1,234
|2013                                             |  |                                             | 6,250   |               |   |                |  |                     | 2,314  |  |   | 446  
|2014                                             |  |                                             | 6,250   |               |   |                |  |                     | 610    |  |   | 83   
|2015 and thereafter                              |  |                                             | 253,125 |               |   |                |  |                     |       |  |   | 66   
|                                                 |  |                                             |         |               |   |                 |  |                     |        |  |   |      
|Total                                            |  | $                                           | 281,250 |               | $ | 777             |  | $                   | 11,039 |  | $ | 4,362
|                                                 |  |                                             |         |               |   |                 |  |                     |        |  |   |      

Capital Leases

We lease equipment, some of which is required to be capitalized if it meets certain criteria, with the related asset recorded in property
and equipment and an offsetting amount recorded as a liability.

Operating Leases

We lease office space and equipment under non-cancelable operating leases. We lease our current headquarters in Redmond, Washington under
an operating lease that expires on May 31, 2013. The lease agreement for our headquarters in Redmond, Washington provides for an eight-year term with an option to renew for an additional five years. Amounts for operating leases do not include
certain operating expenses under these leases such as common area maintenance. As of March 31, 2010, we also leased office space in the United States in the states of Arizona, California, Georgia, Illinois, Massachusetts, Minnesota, Texas and
Virginia, and internationally in Australia, China (Hong Kong), Czech Republic, France, Germany, Netherlands, Singapore and the United Kingdom.

Purchase Obligations

We have future minimum purchase obligations under arrangements with third parties who provide hosting infrastructure services in
connection with the provision of our subscription service offerings.

Senior Convertible Notes

As of March 31, 2010, holders of the Initial Notes may require us to repurchase all or a portion of their Initial Notes at a purchase
price in cash equal to the full principle amount of the Initial Notes plus any accrued and unpaid interest on or after January 15, 2015, or upon the occurrence of certain events including specified corporate events or trading. For further
information, see Note 8 to the notes to financial statements.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our discussion and analysis of financial condition and results of operations is based on our financial statements, which have been
prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets,



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liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other factors that we
believe to be reasonable under the circumstances; such estimates and judgments are periodically re-evaluated. Actual results may differ materially from these estimates under different assumptions, judgments or conditions.

The estimates and judgments noted above are affected by our application of accounting policies. Our critical accounting policies are
those we deem most important to the portrayal of our financial condition and results of operations, including those that require the most difficult, subjective or complex judgments. Our critical accounting policies include business combinations,
revenue recognition, allowances for accounts receivable, share-based compensation and income taxes.

Business Combinations

We are required to allocate the purchase price of acquired companies to the tangible and intangible assets acquired and
liabilities assumed based on their estimated fair values. This valuation requires management to make significant estimates and assumptions, especially with respect to long-lived and intangible assets.

Critical estimates in valuing intangible assets include but are not limited to estimates about: future expected cash flows from customer
contracts, customer lists, distribution agreements, proprietary technology and non-compete agreements; the acquired companys brand awareness and market position, as well as assumptions about the period of time the brand will continue to be
used in our product portfolio; and discount rates. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and
unanticipated events and circumstances may occur.

Other estimates associated with the accounting for these acquisitions may
change as additional information becomes available regarding the assets acquired and liabilities assumed.

Revenue
Recognition

We generate our revenues from the delivery of subscription services (which include software maintenance
services), and to a much lesser degree, consulting services and the sale of software licenses. We recognize revenues in accordance with accounting standards for software and service companies.

We recognize revenue when:



| |  |  | evidence of an arrangement exists;
| | - |  | ----------------------------------



| |  |  | delivery has occurred;
| | - |  | ----------------------



| |  |  | the fees are fixed or determinable; and
| | - |  | ---------------------------------------



| |  |  | collection is considered probable.
| | - |  | ----------------------------------

If collection is not considered probable, we recognize revenues when the fees are collected. If the fees are not fixed or determinable,
we recognize revenues as payments become due from the customer. Accordingly, our judgment as to the probability of collection and determinability of fees may materially affect the timing of our revenue recognition and results of operations. If
non-standard acceptance periods or non-standard performance criteria are required, we recognize revenue upon the expiration of the acceptance period or satisfaction of the acceptance/performance criteria, as applicable.

In contractual arrangements that include the provision of multiple elements, we apply the accounting guidance most applicable to the
specific arrangement to determine how contract consideration should be measured and allocated to the separate elements in the arrangement. Multiple element arrangements require the delivery or performance of multiple products, services and/or rights
to use assets. Generally, separate contracts with the same customer that are entered into at or near the same time are presumed to have been negotiated together and, therefore, are accounted for as a single contractual arrangement in determining how
contract consideration should be measured and allocated to the separate elements in the arrangement. Typically, we measure and allocate the total arrangement fee among each of the



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elements based on their fair value or, if necessary, vendor-specific objective evidence of their fair value (VSOE). VSOE is determined by the price charged when an element is sold
separately or, in the case of an element not yet sold separately, the price set by authorized management, if it is probable that the price, once established, will not materially change prior to separate market introduction.

Revenues

Our revenues are typically recognized monthly as the service is provided to the customer and consist of:



| |  |  | monthly fees paid for subscription services;
| | - |  | --------------------------------------------



| |  |  | amortization of related set-up fees; and
| | - |  | ----------------------------------------



| |  |  | amortization of fees paid for software maintenance services under software license arrangements.
| | - |  | ------------------------------------------------------------------------------------------------

Set-up fees paid by customers in connection with subscription services, as well as the associated direct and incremental costs, such as
labor and commissions, are deferred and recognized ratably over the expected lives of the customer relationships, which generally range from two to five years. In addition to set-up fees, our deferred revenue balances include subscription fees paid
in advance of their recognition and software maintenance fees related to our legacy license offerings. For those subscription service offerings that have been commercially available for only a short period of time, the contractual lives are used as
the best estimate of the expected lives of the customer relationships. We continue to evaluate and adjust the length of these amortization periods as we gain more experience with customer contract renewals and contract cancellations. It is possible
that, in the future, the estimates of expected customer lives may change and, if so, the periods over which such subscription set-up fees and costs are amortized will be adjusted. Any such change in estimated expected customer lives will affect our
future results of operations.

Software maintenance services include technical support and the right to receive unspecified
upgrades and enhancements on a when-and-if available basis. Fees for software maintenance services are typically billed annually in advance of performance of the services with provisions for subsequent automatic annual renewals. We defer the related
revenues and recognize them ratably over the respective maintenance terms, which typically are one year.

Revenues are
adjusted for estimated sales allowances, which are based on our historical experience, including a review of our experience related to price adjustments and sales credits issued.

Portions of our revenues are generated from sales made through our reseller partners. When we assume a majority of the business risks
associated with performance of the contractual obligations, we record the revenues on a gross basis and amounts paid to our reseller partners are recognized as cost of operations. Our assumption of such business risks is evidenced when, among other
things, we take responsibility for delivery of the product or service, establish pricing of the arrangement and are the primary obligor in the arrangement. When our reseller partner assumes the majority of the business risks associated with the
performance of the contractual obligations, we record the associated revenues net of the amounts paid to our reseller partner. Our judgment as to whether we have assumed the majority of the business risks associated with performance of the
contractual obligations materially affects how we report revenues and cost of operations.

Accounts Receivable Allowances

We record provisions for estimated sales allowances against subscription and consulting revenues in the period in which
the related revenues are recorded. We record our sales allowances based on historical experience, including a review of our experience related to price adjustments and sales credits issued.

We make judgments as to our ability to collect outstanding receivables, and we provide an allowance for doubtful accounts, included in
general and administrative expenses. In estimating allowances for doubtful accounts, we consider specific receivables when collection is doubtful, as well as



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an analysis of our historical bad debt experience and the current economic environment. If the data used to estimate the allowance provided for doubtful accounts does not adequately reflect our
future ability to collect outstanding receivables, additional provisions for doubtful accounts may be needed and future results of operations could be materially affected.

Income Taxes

We make estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in
the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

We measure and recognize uncertain tax positions. To recognize such positions we must first determine if is more likely than not that the
position will be sustained on audit. We must then measure the benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Since we are in a net operating loss position for those positions that require a
reserve we do not include interest and penalties related to our contingencies in our income tax expense.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

We are exposed to market risks in the ordinary course of our business. These risks include primarily interest rate and foreign exchange
risks.

Interest Rate Risk.We maintain cash in highly liquid investment vehicles including money market accounts that
bear interest at variable overnight or short term rates. Variable interest rate investment and debt exposes us to differences in future cash flows resulting from changes in market interest rates. Variable interest rate risk can be quantified by
estimating the change in cash flows resulting from a hypothetical 100 basis point increase in interest rates. We do not enter into investments for trading or speculative purposes.

Foreign Currency Risk.We have foreign currency risks related to our revenue and operating expenses denominated in currencies
other than the U.S. dollar. We do not believe movements in the foreign currencies in which we transact will significantly affect future net earnings. Foreign currency risk can be quantified by estimating the change in cash flows resulting from a
hypothetical 10% adverse change in foreign exchange rates. We believe such a change would not have a material impact on our cash flows or financial instruments that are sensitive to foreign currency exchange risk. We do not enter into any hedging
contracts for trading or speculative purposes.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Evaluation of Disclosure Controls and Procedures

Based on our managements evaluation (with the participation of our Chief Executive Officer and Chief Financial Officer), our Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were effective in
providing reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC and is
accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the three months ended March 31, 2010, that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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Limitation on Effectiveness of Controls

It should be noted that any system of controls, including disclosure controls and procedures and internal controls over financial
reporting, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. The design of any control system is based, in part, upon the benefits of the control system relative
to its costs. Our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and the actual effectiveness of our disclosure controls and procedures is described above.

Control systems can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override
of the control. In addition, over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of these and other inherent limitations of control systems,
there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

PART II. OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

On
April 6, 2010, Concur Technologies, Inc. was named as one of 38 defendants in a purported patent infringement lawsuit, captioned CEATS, Inc. v. Continental Airlines, Inc., et al., in the United States District Court for the Eastern District of
Texas. The complaint generally alleges patent infringement by the defendants under the Patent Laws of the United States of America, 35 U.S.C. §§ 1 et seq., including 35 U.S.C. § 271(a), (b), (c), and/or (f). The plaintiff seeks
injunctions enjoining the defendants from the alleged infringement and damages in an unspecified amount.

From time to time we
are involved in legal proceedings that arise in the ordinary course of our business. Any such proceedings, whether meritorious or not, could be time consuming, costly, and result in the diversion of significant operational resources or management
time.

Although the outcomes of legal proceedings are inherently difficult to predict, we are not currently involved in any
legal proceeding in which the outcome, in our judgment based on information currently available, is likely to have a material adverse effect on our business or financial position.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

We operate
in a dynamic and rapidly changing business environment that involves multiple risks and substantial uncertainty. The following discussion addresses the risks and uncertainties that could cause, or contribute to causing, actual results to differ from
expectations in material ways. In evaluating our business, investors should pay particular attention to the risks and uncertainties described below and in other sections of this report and in our subsequent filings with the SEC.

We depend on sales of a relatively small number of our solutions for a substantial majority of our revenues, and decreased demand
for any of those solutions could substantially harm our revenues and results of operations.

We generated 94% of our
total revenues for the three months ended March 31, 2010, from four solutionsConcur Travel & Expense, Concur Expense, Concur ExpenseLink and Concur Cliqbook Travel. We expect these solutions to continue to constitute a large
percentage of our total revenues as we continue to expand our service offerings. Our financial performance and business outlook depends on continued market acceptance of these solutions. If customers reduce or cancel their subscriptions for our
solutions due to economic conditions or because our competitors (some of which have substantially greater resources than we do) develop new offerings, or if we do not keep up with technological advancements in services and software platforms,
delivery models or product features, our revenues could decline. There can be no assurance that our solutions will continue to maintain current levels of market penetration or that we will maintain current levels of revenues from sales of these
solutions in the future.

If the market for integrated travel and expense services does not grow as we expect it to, our
business will be harmed.

The market for integrated travel and expense services is developing, and it is not certain
whether these services will continue to achieve market acceptance and sustain high demand. Our future revenue and profits depend on increasing customer subscriptions for integrated travel and expense services. The market for integrated travel and
expense services may not grow, or may shrink. Our future financial



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performance and revenue growth depend on the willingness of enterprise customers to use integrated travel and expense services. Many enterprises have internal resources and processes to manage
corporate travel and expenses, so they may not perceive the benefit of our external integrated travel and expense management services. Privacy concerns and transition costs are also factors that may affect an enterprises decision to subscribe
to an external solution. If enterprises do not value the benefit of integrated travel and expense services, then the market for these services will not develop at the rate that we anticipate.

Unfavorable economic conditions may continue or worsen, affecting our business and financial performance.

Our financial performance depends, in part, on the state of the economy, which deteriorated in the recent broad recession, and which may
deteriorate in the future. Lower levels of economic activity result in declines in corporate spending on travel, fewer travel and expense transactions, lower information technology spending, and deceased revenue for us. The core factors that affect
customer usage and therefore our subscription revenue are unemployment, recession-driven attrition through business failure or acquisition, and travel budget cutbacks. The 20082009 contraction in the global economy appears to be lingering, and
continuing or worsening economic conditions, as well as increased volatility of foreign exchange rates, and impairment of goodwill and other assets, may further adversely affect our business and operating results. If unfavorable economic conditions
continue or worsen, our business, operating results and financial condition could be materially and adversely affected.

We face significant competition from companies with longer operating histories and greater resources than we have, and our business
will suffer if we fail to compete effectively.

Our principal direct competition comes from independent vendors of
corporate travel and expense management software and services, as well as financial institutions and enterprise resource planning software vendors that sell products similar to ours along with their suites of other products and services. Some of
these competitors may offer services similar to ours at a greatly reduced price in order to achieve greater sales of other services. Many of our competitors have longer operating histories; more financial, technical, marketing and other resources;
greater name recognition and more customers for their products and services than we do. Some of our competitors, particularly major financial institutions and enterprise resource planning software vendors, have well-established relationships with
our current and potential customers, as well as with systems integrators and other vendors and service providers. These competitors may also be able to respond more quickly to new or emerging technologies and changes in customer requirements, devote
greater resources to the development, promotion and sale of their products, or better withstand economic downturns. We also compete with the internal development efforts of potential customers and, at times, have to overcome their reluctance to move
away from existing paper-based systems. In addition, we anticipate the entrance of new competitors in the future. This competitive landscape may make it difficult for us to achieve our objective of increasing the number of our customers and
expanding our role in the travel supply chain. Increased competition may also result in price reductions, reduced gross margins and change in market share and could have a material adverse effect on our business, financial condition and results of
operations.

Because we depend upon strategic relationships with third parties, our revenues could decline if we do not
sustain and develop these relationships.

We depend on strategic reseller and referral relationships to offer products
and services to a larger customer base than we can reach through our current direct sales, telesales and internal marketing efforts. Some of our strategic relationships are in early stages of operation and, accordingly, it is uncertain whether these
third parties will be able or willing to expend the required effort and resources to market our products and services successfully or provide the volume and quality of orders and lead referrals that we currently expect. In order to expand our market
presence and broaden our distribution capacity, in 2008 we entered into a strategic referral relationship with American Express Travel Related Services Company, Inc., and we realized our first customer additions as a result of that relationship in
2009. In 2010, we announced the participation of Concur Breeze, our expense management service for small and mid-sized businesses, in Googles application marketplace. We believe that application marketplaces such as Googles will be an
important channel for the small business market. In the event that we are unable to effectively utilize this channel, or competitors utilize this channel more effectively, our future growth prospects may be adversely affected.



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Our success depends in part on the ultimate success of our strategic reseller and referral
partners and their ability to market our products and services successfully. Some of these third parties have entered, and may continue to enter, into strategic relationships with our competitors. Further, many of our strategic partners have
multiple strategic relationships and they may not regard us as significant for their businesses. Our strategic partners may terminate their respective relationships with us, pursue other partnerships or relationships, or attempt to develop or
acquire products or services that compete with our products or services. Our strategic partners also may impair our ability to enter into other desirable strategic relationships. Further, unfavorable global economic conditions may hurt our strategic
partners, making them less effective or causing them to modify or cancel their relationships with us.

If we are unable to
maintain our existing strategic relationships or enter into new ones, we would have to devote substantially more resources to the distribution, sales and marketing of our products and services, which would increase our costs and decrease our
earnings.

Our future growth and financial performance depends on our ability to grow our subscription services.

Our costs of providing subscription services are relatively fixed in the short term, so we may not be able to adjust
expenses quickly enough to offset slowdowns in subscription sales. In addition, any delays in deployment may prevent us from recognizing subscription revenue for indeterminate periods of time, even when we have already incurred costs relating to the
deployment of our subscription services. Further, we may experience unanticipated increases in costs associated with providing our subscription services to customers over the term of our customer contracts as a result of inaccurate internal cost
projections or other factors, which may harm our operating results. If our customers cannot make payments or gain access to credit to make payments, they may be forced to cancel existing subscriptions for our products and services. Some of our sales
contracts contain cancellation provisions and, if cancelled, could result in us recognizing substantially less revenue than the aggregate value of those contracts over their terms. If customers cancel or otherwise seek to terminate subscription
agreements prior to the end of their respective terms, or if we are unable to renew such agreements, our operating results in future periods could be adversely affected.

We depend on our relationships with travel suppliers, so any adverse changes in these relationships could adversely affect our
business, financial condition and results of operations.

An important component of our business success is our ability
to maintain and develop relationships with travel suppliers. Adverse changes in existing relationships, including any impact of the economic recession on the businesses of those suppliers, could reduce the amount, quality and breadth of attractively
priced travel products and services that we are able to offer, which could adversely affect our business, financial condition and results of operations.

If our customers have concerns over the scalability or security of our products, they might discontinue buying them and our
revenues will decline.

If customers believe that our subscription services offerings are not sufficiently scalable, do
not provide adequate security for the dissemination of information over the Internet or corporate extranets, or are otherwise inadequate for Internet or extranet use or if, for any other reason, our customers decide not to accept our subscription
services for use, our business will be harmed. As part of our subscription services, we receive credit card, travel booking, employee, purchasing, supplier and other financial and accounting data, through the Internet or extranets and there can be
no assurance that this information will not be subject to computer break-ins, theft and other improper activity that could jeopardize the security of information handled by our products. Any such lapse in security could expose us to litigation, loss
of customers, damage to our reputation, or otherwise harm our business.



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In addition, any person who circumvents our security measures could steal proprietary or
confidential customer information or cause interruptions in our operations. We incur significant costs to protect against security breaches, and may incur significant additional costs to alleviate problems caused by any breaches. Customers
concerns about security could deter them from using the Internet to conduct transactions that involve confidential information, so our failure to prevent security breaches, or well-publicized security breaches affecting the Internet in general,
could significantly harm our business and financial results.

Privacy concerns could result in regulatory changes that
may harm our business.

Personal privacy has become a significant issue in the United States and many other countries
where we operate. The United States and many other countries have imposed restrictions and requirements on the use of personal information by those collecting such information. Changes to laws or regulations affecting privacy, if applicable to our
business, could impose additional costs and liability on us and could limit our use and disclosure of such information. If we were required to change our business activities or revise or eliminate services, our business could be harmed.

Interruption of our operations could prevent us from delivering our products and services to our customers, which could
significantly harm our business.

Because our business is primarily conducted over the Internet, it depends on our
ability to protect our computer equipment and the information stored in our computer equipment, offices and hosting facilities against damage from earthquake, floods, fires, power loss, telecommunications failures, unauthorized intrusion and other
events. There can be no assurance that our disaster preparedness will prevent significant interruption of our operations.

In
addition, we engage third party facility providers for our Web hosting facilities and related infrastructure that is essential for our subscription services. Our service to customers could be interrupted in the event of a natural disaster, by a
hosting provider decision to close a facility or terminate operations or by other unanticipated problems. Similarly, we use third-party telecommunications providers for Internet and other telecommunication services. Any of these third-party
providers may fail to perform their obligations adequately, causing business interruption or system damage that could reduce our revenue, cause us to issue credits or pay penalties, cause customers to terminate their subscriptions, or decrease our
renewal rates.

Our quarterly revenues and operating results may fluctuate in future periods, we may fail to meet
expectations of investors and public market analysts or we may be affected by other adverse factors, which could cause the market price of our common stock to be volatile or to decline.

Our revenues and operating results may fluctuate significantly from quarter to quarter, and if they fall below the expectations of
investors or public market analysts, the price of our common stock could decline substantially. Factors that might cause quarterly fluctuations in our operating results include:



| |  |  | general economic and market conditions;
| | - |  | ---------------------------------------



| |  |  | the evolving demand for our solutions;
| | - |  | --------------------------------------



| |  |  | spending decisions by our customers and prospective customers;
| | - |  | --------------------------------------------------------------



| |  |  | our ability to manage expenses;
| | - |  | -------------------------------



| |  |  | the timing of new product releases;
| | - |  | -----------------------------------



| |  |  | changes in our pricing policies or those of our competitors;
| | - |  | ------------------------------------------------------------



| |  |  | the timing of large contracts or contract terminations;
| | - |  | -------------------------------------------------------



| |  |  | changes in mix of our offerings;
| | - |  | --------------------------------



| |  |  | the mix of sales channels through which our solutions are sold;
| | - |  | ---------------------------------------------------------------



| |  |  | costs of developing new products and enhancements;
| | - |  | --------------------------------------------------



| |  |  | our ability to adequately provide software solutions on-demand; and
| | - |  | -------------------------------------------------------------------



| |  |  | global political conditions.
| | - |  | ----------------------------



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Our acquisitions of, and investments in, other companies, products, or technologies
may not yield expected benefits.

We have acquired and invested in other companies from time to time, and we may
acquire or invest in other companies, products or technologies in the future. Our most recent acquisition, for example, occurred in August 2009 when we acquired Etap-On-Line, a provider of business and travel expense management solutions based in
Paris, France in order to expand our presence in the European market.

We may not realize the anticipated benefits of our
acquisitions or investments to the extent that we anticipate, or at all. We may issue additional equity securities to pay for future acquisitions or investments, the issuance of which could be dilutive to our existing stockholders and affect the
trading price of the notes. If any acquisition or investment is not perceived as ultimately improving our financial condition and results of operations, our stock price may decline. In addition, we may have unanticipated costs or liabilities from
our acquisitions or investments and may not be able to retain key employees from acquired businesses. The value of acquired businesses or investments may decline due to market conditions or adverse developments in the acquired business, as a result
of factors such as the performance of the business relative to its business plan, revenue and cost trends, its liquidity and cash position, and market acceptance of its products.

Our ability to integrate acquisitions may affect our business, operating results and financial condition.

For us to realize the benefits of past and future acquisitions, we must successfully integrate the acquired businesses with ours. Some of
the challenges to successful integration include:



| |  |  | unanticipated costs or liabilities associated with an acquisition;
| | - |  | ------------------------------------------------------------------



| |  |  | difficulties integrating acquired operations, personnel, technologies or products;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | diversion of management attention from business operations and strategy;
| | - |  | ------------------------------------------------------------------------



| |  |  | commitment of resources that are needed in other parts of our business;
| | - |  | -----------------------------------------------------------------------



| |  |  | potential loss of key employees;
| | - |  | --------------------------------



| |  |  | potential litigation by third parties, such as claims related to intellectual property or other assets acquired or liabilities assumed; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | non-cash amortization charges which could harm our future operating results.
| | - |  | ----------------------------------------------------------------------------

To the extent that these challenges are not effectively overcome, our future business, operating results or financial condition may be
adversely affected.

The growth of the international component of our business subjects us to risks associated with
foreign operations.

Our international operations are an increasingly important part of our business. Revenues from
customers located outside the United States represented 12% of total revenues for the three months ended March 31, 2010. In addition, a portion of our United States revenue reflects utilization of our services outside of the United States by
customers located in the United States. We expect international revenues as a percentage of our total revenues to increase. Our international operations are subject to many difficulties and incremental costs, including:



| |  |  | costs to customize our products for foreign markets;
| | - |  | ----------------------------------------------------



| |  |  | foreign currency exchange rate risk;
| | - |  | ------------------------------------



| |  |  | compliance with multiple, conflicting and changing governmental laws and regulations;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | different pricing environments;
| | - |  | -------------------------------



| |  |  | longer sales cycles;
| | - |  | --------------------



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| |  |  | greater difficulty in collecting accounts receivable;
| | - |  | -----------------------------------------------------



| |  |  | import and export restrictions and tariffs;
| | - |  | -------------------------------------------



| |  |  | adverse tax consequences;
| | - |  | -------------------------



| |  |  | potentially weaker protection for our intellectual property than in the United States and practical difficulties in enforcing our rights abroad; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties staffing and managing foreign operations.
| | - |  | ------------------------------------------------------

Our ability to successfully sell and implement into international markets will depend on our ability to develop and support solutions
that incorporate the tax laws, accounting practices and currencies of applicable countries. Our international operations also involve foreign currency risks for us. Most of our revenues are denominated in United States dollars, but we believe that
an increasing portion of our revenues will be denominated in foreign currencies. Unfavorable economic conditions have been accompanied by increased foreign currency exchange rate volatility. We currently do not engage in foreign exchange hedging
activities and, therefore, our international revenues and expenses are currently subject to the risks of foreign currency fluctuations.

Our international operations also increase our exposure to international laws and regulations. If we are unable to comply with foreign
laws and regulations, which are often complex and subject to variation and unexpected changes, we could incur unexpected costs and potential litigation. For example, the governments of foreign countries might attempt to regulate our services and
products or levy sales or other taxes relating to our activities. In addition, foreign countries might impose tariffs, duties, price controls or other restrictions on foreign currencies or trade barriers, any of which could make it more difficult
for us to conduct our business in international markets.

We intend to continue to expand our global sales and marketing
activities and enter into relationships with additional international distribution partners. We are in the early stages of developing our distribution channels in markets outside the United States. We may not be able to attract and retain
distribution partners that will be able to market our products effectively.

Changes in financial accounting standards
or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported results of operations.

A change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting of
transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and will occur in the future. Changes to existing rules or the questioning of current
practices may adversely affect our reported financial results or the way in which we conduct our business.

If we fail
to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, our ability to operate our business and investor views of us.

Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce
accurate financial statements on a timely basis in a costly and time- consuming effort that needs to be re-evaluated frequently. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. We have in the past experienced a material weakness in our internal controls, and we may discover material weaknesses in our
internal controls in the future. Any failure to maintain or implement required controls could cause us to fail to meet our periodic reporting obligations, or result in material misstatements in our financial information. Any such delays or
restatements could cause investors to lose confidence in our reported financial information and lead to a decline in the trading price of our stock.



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Our lengthy sales cycle could adversely affect our financial results.

Our sales cycle, which is the time between initial contact with a potential customer and the ultimate sale, is often
lengthy and unpredictable. Our potential customers typically commit significant resources to an evaluation of available alternatives and require us to expend substantial time, effort and money educating them about the value of our offerings. As a
result, we have limited ability to forecast the timing and size of specific sales. In addition, customers may delay their purchases from one quarter to another as they wait for new product enhancements. Customers may delay their purchases for even
longer periods due to their inability to assess and forecast future business activity, impaired purchasing ability or other economic factors. Any delay in completing, or failure to complete, sales in a particular quarter or year could harm our
business and could cause our operating results to vary significantly.

We may not successfully develop or introduce new
products or enhancements to existing products, or successfully integrate acquired products and services with our offerings, and as a result we may lose existing customers or fail to attract new customers and our revenues may suffer.

Our future financial performance and revenue growth depends upon the successful development, introduction and customer
acceptance of new and enhanced versions of our software solutions and on our ability to integrate products and services that we acquire into our existing and future solutions. Our business could be harmed if we fail to deliver enhancements to our
solutions that meet customer needs. We have experienced delays in the planned release dates of enhancements to our solutions and we have discovered errors in new releases after their introduction. Either situation could result in adverse publicity,
loss of sales, delay in market acceptance of our products and services, or customer claims, including, among other things, warranty claims against us, any of which could harm our business. If we do not deliver new product versions, upgrades or other
enhancements to existing products and services on a timely and cost-effective basis, our business will be harmed. We are also continually seeking to develop new offerings. However, we remain subject to all of the risks inherent in product
development, including unanticipated technical or other development problems, which could result in material delays in product introduction and acceptance or significantly increased costs. There can be no assurance that we will be able to develop
new solutions successfully, or to introduce and gain market acceptance of new solutions in a timely manner.

If our
products and services do not keep pace with technological change, our sales could decline and our business could be harmed.

We must continually modify and enhance our software solutions to keep pace with changes in hardware and software platforms, database
technology, electronic commerce technical standards and other items. As a result, uncertainties related to the timing and nature of new product announcements or introductions, or modifications by vendors of operating systems, back-office
applications and browsers and other Internet-related applications, could harm our business.

We rely on third-party
software and services that may be difficult to replace.

We license or purchase software and services provided by third
parties in order to offer some of our services and software offerings. Such third-party software and services may not continue to be available on commercially reasonable terms, if at all. The loss or inability to maintain our rights to use any of
these software or services could result in delays in the sale of our services or software offerings until equivalent technology is either developed by us, or, if available, is identified, licensed and integrated, which could harm our business.

Our stock price has experienced high volatility, may continue to be volatile and may decline.

The trading price of our common stock has fluctuated widely in the past and may do so in the future, as a result of many factors. In
particular, the stock market as a whole has experienced extreme price and volume fluctuations that affected the market price of many technology companies in ways that may have been unrelated to those companies operating performance. Factors
that could cause our stock price to fluctuate include:



| |  |  | general and industry-specific business, economic and market conditions;
| | - |  | -----------------------------------------------------------------------



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| |  |  | the announcement of a merger or acquisition;
| | - |  | --------------------------------------------



| |  |  | fluctuations in our actual and anticipated operating results;
| | - |  | -------------------------------------------------------------



| |  |  | changes in our earnings estimates by analysts;
| | - |  | ----------------------------------------------



| |  |  | failing to achieve revenue or earnings expectations;
| | - |  | ----------------------------------------------------



| |  |  | volatility inherent in prices of technology company stocks;
| | - |  | -----------------------------------------------------------



| |  |  | adverse publicity; and
| | - |  | ----------------------



| |  |  | the volume of trading in our common stock, including sales upon exercise of outstanding options.
| | - |  | ------------------------------------------------------------------------------------------------

Securities class action litigation has often been brought against companies that experience periods of volatility in the market prices of
their securities. Securities class action litigation could result in substantial costs and a diversion of our managements attention and resources.

If we fail to attract and retain qualified personnel, our business could be harmed.

Our success depends in large part on our ability to attract, motivate and retain highly qualified personnel, including personnel added
through our acquisition of Etap-On-Line. Competition for such personnel is intense and there can be no assurance that we will be successful in attracting, motivating and retaining key personnel. Many of our competitors have greater financial and
other resources than us for attracting experienced personnel. We also compete for personnel with other software vendors and consulting and professional services companies. Further, changes in applicable stock exchange listing standards relating to
obtaining stockholder approval of equity compensation plans could make it more difficult or expensive for us to grant options to employees in the future. We rely on our direct sales force to sell our services and software in the marketplace. We
anticipate increasing our direct sales force. There is significant competition for direct sales personnel with the advanced sales skills and technical knowledge we need. If we were unable to hire or retain competent sales personnel our business
would suffer. In addition, by relying primarily on a direct sales model, we may miss sales opportunities that might be available through other sales channels, such as domestic and international resellers and strategic referral arrangements. Any
inability to hire and retain salespeople or any other qualified personnel, or any loss of the services of key personnel, would harm our business.

Our ability to protect our intellectual property is limited and our products may be subject to infringement claims by third
parties.

Our success depends, in part, upon our proprietary technology, processes, trade secrets and other proprietary
information and our ability to protect this information from unauthorized disclosure and use. We rely on a combination of patent, copyright, trade secret and trademark laws, confidentiality procedures, contractual provisions and other similar
measures to protect our proprietary information. Although we have six patent applications pending in various countries, we do not own any issued patents. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy
aspects of our products or to obtain and use information that we regard as proprietary and third parties may attempt to develop similar technology independently. We provide our licensed customers with access to object code versions of our software
and to other proprietary information underlying our software. Policing unauthorized use of our products is difficult, particularly because the global nature of the Internet makes it difficult to control the ultimate destination or security of
software or other data transmitted. While we are unable to determine the extent to which piracy of our software products exists, software piracy can be expected to be a persistent problem. In addition, the laws of some foreign countries do not
protect our proprietary rights to as great an extent as do the laws of the United States and we expect that it will become more difficult to monitor use of our products as we increase our international presence. There can be no assurance that
our means of protecting our proprietary rights will be adequate, or that our competitors will not independently develop similar technology. In addition, there can be no assurance that



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third parties will not claim infringement by us with respect to current or future products or other intellectual property rights. Any such claims could have a material adverse effect on our
business, results of operations and financial condition. In addition, over the past several years, we have made numerous changes in our product names. Although we own registered trademarks in the United States and have filed trademark applications
in the United States and in certain other countries, we cannot assure you that our strategy with respect to our trademark portfolio will be adequate to secure or protect all necessary intellectual property.

Anti-takeover effects of our charter documents and Delaware law could discourage or prevent a change in control of Concur.

Provisions of our certificate of incorporation and bylaws, and of Delaware General Corporation Law, may discourage, delay or
prevent a change of control. For example:



| |  |  | our Board of Directors may, without stockholder approval, issue shares of preferred stock with special voting or economic rights;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | our stockholders do not have cumulative voting rights and, therefore, each of our directors can only be elected by a majority of our votes cast at a
stockholder meeting;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a special meeting of stockholders may only be called by a majority of our Board of Directors, the Chairman of our Board of Directors, or our Chief
Executive Officer;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our stockholders may not take action by written consent;
| | - |  | --------------------------------------------------------



| |  |  | our Board of Directors is divided into three classes, only one of which is elected each year;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | we require advance notice for nominations for election to the Board of Directors or for proposing matters that can be acted upon by stockholders at
stockholder meetings; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we are subject to Section 203 of the Delaware General Corporation Law, which, under certain circumstances, may make it more difficult for a person
who would be an Interested Stockholder, as defined in Section 203, to effect various business combinations with us for a three-year period. Our amended and restated certificate of incorporation and amended and restated bylaws do not
exclude us from the restrictions imposed under Section 203.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We Have Increased Our Indebtedness.

In April 2010 we completed an offering of $287.5 million aggregate principal amount of our senior convertible
notes due 2015, as a result of which we incurred approximately $287.5 million principal amount of new indebtedness that we may be required to repurchase at maturity in 2015 or upon the occurrence of certain fundamental changes involving us. This
indebtedness could, among other things:



| |  |  | make it difficult for us to pay other obligations;
| | - |  | --------------------------------------------------



| |  |  | make it difficult to obtain favorable terms for any necessary future financing for working capital, capital expenditures, debt service requirements or
other purposes;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | require us to dedicate a substantial portion of our cash flow from operations to service the indebtedness, thereby reducing the amount of cash flow
available for other purposes; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limit our flexibility in planning for and reacting to changes in our business.
| | - |  | ------------------------------------------------------------------------------

Conversion of our senior convertible notes will dilute the ownership interest of existing stockholders.

The conversion of some or all of our outstanding senior convertible notes due 2015 will dilute the ownership interest of existing
stockholders to the extent we deliver newly-issued shares of common stock upon conversion. Holders of such notes may convert them on or after January 15, 2015 until the close of business on the second scheduled trading day immediately preceding the
maturity date of such notes. We expect to satisfy our conversion obligation by delivering cash and potentially shares of common stock. Prior to January 15, 2015, conversion of such notes is subject to satisfaction of certain conditions. Any sales in
the public market of shares of common stock issued upon conversion of such notes could adversely affect trading prices of our common stock. In addition, the existence of such notes may encourage short selling by market participants because the
conversion of such notes could be used to satisfy short positions, or anticipated conversion of such notes into shares of our common stock could depress the price of our common stock.



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The note hedges and warrants may affect the value of our common stock.

In connection with our recent offering of senior convertible notes due 2015, we entered into note hedges covering
approximately 5 million shares of our common stock. We also sold warrants to acquire up to approximately 5.5 million shares of our common stock at an initial strike price of $73.29. The note hedges are intended to reduce the potential economic
dilution to our common stock upon conversion of the senior convertible notes. However, the warrants could have a dilutive effect, if the market price per share of our common stock exceeds the strike price of the warrants. The counterparties to our
note hedge and warrants are likely to enter into or unwind various derivatives with respect to our common stock, or purchase or sell shares of our common stock or other securities linked to or referencing our common stock in secondary market
transactions prior to the maturity of the senior convertible notes. These activities could adversely affect the value of our common stock.



|ITEM 6. | EXHIBITS
|------- | --------

(a) The
following exhibits are filed as a part of this report:



|               |  |                                                                                                                          |  |                           |  |           |  |                      |  |                |  |                  
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ------------------------- |  | --------- |  | -------------------- |  | -------------- |  | -----------------
|               |  |                                                                                                                          |  | Incorporated by Reference
|Exhibit
Number |  | Exhibit Description                                                                                                      |  | Form                      |  | File No.  |  | Date of
First Filing |  | Exhibit
Number |  | Provided
Herewith
|               |  |                                                                                                                          |  |                           |  |          
|3.01           |  | Second Amended and Restated Certificate of Incorporation                                                                 |  | 8-K                       |  | 000-25137 |  | March 29, 2010       |  | 3.1            |  |                 
|               |  |                                                                                                                          |  |                           |  |          
|31.01          |  | Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).                             |  |                          |  |          |  |                     |  |               |  | X                
|               |  |                                                                                                                          |  |                           |  |          
|31.02          |  | Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).                             |  |                          |  |          |  |                     |  |               |  | X                
|               |  |                                                                                                                          |  |                           |  |          
|32.01          |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).* |  |                          |  |          |  |                     |  |               |  | X                
|               |  |                                                                                                                          |  |                           |  |          
|32.02          |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).* |  |                          |  |          |  |                     |  |               |  | X                



|* | This certification is not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that
section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Concur specifically incorporates it by reference.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

Dated: May 4, 2010



| |  |                           |  |                                                          
| |  | ------------------------- |  | ---------------------------------------------------------
| |  | CONCUR TECHNOLOGIES, INC.
| |  |                          
| |  | By                        |  | /s/    JOHN F.
ADAIR                                     
| |  |                           |  | John F. Adair                                            
| |  |                           |  | Chief Financial Officer                                  
| |  |                          
| |  |                           |  | principal financial officer and duly
authorized signatory



39



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##### Table of Contents

EXHIBIT INDEX



|               |  |                                                                                                                          |  |                           |  |           |  |                      |  |                |  |                  
|-------------- |  | ------------------------------------------------------------------------------------------------------------------------ |  | ------------------------- |  | --------- |  | -------------------- |  | -------------- |  | -----------------
|               |  |                                                                                                                          |  | Incorporated by Reference
|Exhibit
Number |  | Exhibit Description                                                                                                      |  | Form                      |  | File No.  |  | Date of
First Filing |  | Exhibit
Number |  | Provided
Herewith
|               |  |                                                                                                                          |  |                           |  |          
|3.01           |  | Second Amended and Restated Certificate of Incorporation                                                                 |  | 8-K                       |  | 000-25137 |  | March 29, 2010       |  | 3.1            |  |                 
|               |  |                                                                                                                          |  |                           |  |          
|31.01          |  | Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a).                             |  |                          |  |          |  |                     |  |               |  | X                
|               |  |                                                                                                                          |  |                           |  |          
|31.02          |  | Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a).                             |  |                          |  |          |  |                     |  |               |  | X                
|               |  |                                                                                                                          |  |                           |  |          
|32.01          |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).* |  |                          |  |          |  |                     |  |               |  | X                
|               |  |                                                                                                                          |  |                           |  |          
|32.02          |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 and Securities Exchange Act Rule 13a-14(b).* |  |                          |  |          |  |                     |  |               |  | X                



|* | This certification is not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that
section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that Concur specifically incorporates it by reference.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



40